September 2022

• Global markets declined sharply in September as central banks accelerated interest rate increases and recession fears intensified globally.
• Bond yields surged to multi-year highs as inflation remained stubbornly elevated across developed economies.
• The U.S. dollar strengthened significantly, creating pressure across global financial markets and emerging economies.
• European markets remained heavily affected by the ongoing energy crisis and weakening economic conditions.
• Technology and growth sectors continued underperforming amid rising interest rates.
• Commodity prices weakened overall due to worsening global growth expectations.

Asia (ex. Japan)

Asian markets outside Japan weakened significantly during September as stronger U.S. dollar conditions, slowing global trade and continued Chinese economic weakness pressured regional investor sentiment.

China’s property sector difficulties persisted despite ongoing policy support efforts, while export-oriented markets such as Taiwan and South Korea faced weakening semiconductor demand expectations.

Europe

European equities declined sharply during September as soaring energy costs, tightening monetary policy and worsening recession fears weighed heavily on markets.

The European Central Bank implemented another large interest rate increase while governments introduced emergency measures aimed at stabilising energy markets and supporting households.

United States

U.S. equities experienced heavy losses during September as the Federal Reserve continued raising interest rates aggressively and signalled that rates would likely remain elevated until inflation showed clear signs of moderation.

Treasury yields surged to multi-year highs, creating significant pressure for technology and growth-oriented sectors while increasing concerns regarding recession risks for 2023.

United Kingdom

UK financial markets experienced extreme volatility during September following the government’s large unfunded tax-cut announcement, which triggered a sharp decline in sterling and severe disruption within the gilt market.

The Bank of England intervened temporarily to stabilise bond markets after pension funds faced liquidity pressures caused by rapidly rising gilt yields.

Japan

Japanese equities weakened during September as global recession fears and tightening financial conditions affected investor sentiment.

The yen weakened to multi-decade lows against the U.S. dollar due to widening interest rate differentials, prompting Japanese authorities to intervene in currency markets for the first time in many years.

Emerging Markets

Emerging markets faced severe pressure during September as rising U.S. interest rates, stronger dollar conditions and deteriorating global growth expectations triggered capital outflows and currency weakness.

Several emerging economies were forced to tighten monetary policy further to defend currencies and contain inflation pressures.

Commodities

Commodity prices weakened overall during September as investors increasingly feared global recession and slowing industrial demand. Oil prices declined despite ongoing geopolitical supply risks as demand expectations deteriorated.

Industrial metals also weakened significantly due to slowing Chinese growth and global manufacturing slowdown, while gold prices remained under pressure from rising real yields and strong dollar conditions.