Global financial markets adhered to the traditional summer playbook, and then some. Prices of risk assets drifted lower amid lighter volumes, before accelerating to the downside in September, traditionally the weakest month for equities in the calendar year.
Asset class returns for the quarter in the table above evoke memories of 2022; most global equity markets and G7 government bonds were marked down, presenting positional challenges for investors with few places to seek shelter. All equity sectors were offside except for energy and communication services. Oil rallied almost 30% on both supply and demand factors, whilst the dollar is proving to be the cleanest shirt in a dirty pile of laundry.
The chief protagonist remains US Federal Reserve Chairman Jerome Powell, who, alongside colleagues at the Federal Open Market Committee, opted to leave interest rates at the September meeting unchanged at the 5.25 – 5.50% level. Crucially, the accompanying statement also opened the door to one further interest rate hike this year along with fewer expected rate cuts in 2024.
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