September 2026 Market Review: Markets deliver mixed performance amid synchronised policy tightening

In this article

1. Market and Macro Overview
2. Equities overview
3. Fixed income overview
4. Commodities overview
5. Currencies
6. In focus: upcoming macro data releases
7. Conclusion

Global equity market performance remained mixed in September, as renewed monetary tightening by major central banks and rising bond yields weighed on risk assets. Investors balanced the inflationary effects of the continuing US-Iran war against resilient economic activity and sustained AI investment. Disruptions to oil flows through the Strait of Hormuz increased energy costs and raised concerns that inflation would remain above central bank targets for longer, reinforcing the case for tighter monetary policy. Meanwhile, strong cloud infrastructure and AI semiconductor revenue growth reported by Oracle and Broadcom pointed to sustained demand for AI infrastructure, providing a positive signal for the growth outlook of selected technology companies.

On the fixed income side, global bonds came under pressure as yields rose across major developed markets following the hawkish stance of global central banks. The Fed raised interest rates against a backdrop of persistent inflation, resilient domestic spending and robust capital investment. Commodity performance diverged. Oil prices were supported by supply concerns, worsened by the temporary closure of Saudi Arabia’s East-West pipeline following drone attacks, although its subsequent reopening provided some relief. Gold, meanwhile, came under pressure from a stronger US dollar and higher bond yields.

Market and Macro Overview

• Global central banks delivered several rate increases during the month, highlighting their focus on inflation risks caused by the Iran war-induced energy cost spike, expansionary fiscal policies and surging demand for AI investment. On 16 September, the Fed unanimously raised its target range by 25 basis points to 3.75–4.00%, with Fed Chair Kevin Warsh emphasising that this policy action will support a timelier return to the Fed’s 2.0% inflation target. Similarly, the ECB raised its policy rate by 25 basis points to 2.50%, with the goal of taming an inflation rise driven mostly by higher energy costs from the Middle East war. Surging oil and natural gas prices pushed inflation well past the ECB’s 2.0% target in September. The Bank of Japan followed suit and increased its policy rate to 1.25%, a 31-year high. The BoJ’s governor signalled that the move was mainly to prevent inflation from overshooting its target of 2.0%. On the other hand, the Bank of England held Bank Rate at 3.75%, with three of nine members voting for a 25-basis-point increase. However, the BoE hardened its rhetoric on price pressures, warning that inflation could spike past 4% in 2027 due to global energy shocks, and that further tightening would be needed if inflationary pressures persist.
• United States data released during September showed August headline CPI inflation unchanged at 3.4% year on year, while core inflation eased to 2.4% from 2.5%. On a seasonally adjusted monthly basis, headline and core prices rose by 0.4% and 0.3%, respectively. Payroll employment increased by 162,000 in August and unemployment remained at 4.1%, indicating continued labour-market resilience.

(Source: U.S. Bureau of Labor Statistics)

• The euro area recorded firmer inflation alongside improving business activity. Final euro-area headline inflation increased to 3.2% year on year in August from 2.9% in July. GDP expanded by 0.6% quarter on quarter in Q2 2026, following stagnant growth in Q1, with net exports and household consumption contributing positively. September’s flash composite PMI rose to 53.1 from 52.0 in August, signalling the fastest expansion in private-sector activity since April 2023. Both manufacturing and services expanded, with stronger new orders and increased AI and defence spending supporting activity.

(Source: Eurostat and S&P Global)

• South Africa saw August headline inflation rise to 4.4% from 4.3% in July, while Q2 2026 GDP contracted by 0.2% quarter on quarter. Mining, trade and manufacturing drove down economic activity on the production side of the economy, while a sharp rise in imports and subdued investment constrained growth on the expenditure side. The SARB raised its policy rate by 25 basis points to 7.25% in response to renewed inflation risks and concerns about second-round effects.

(Source: Statistics South Africa and SARB)

Equities overview

Global equities were mixed in September, as resilient earnings and continued AI investment helped cushion the impact of higher bond yields and renewed monetary tightening. Demand for semiconductors, cloud services and data-centre infrastructure supported growth expectations across technology and industrial supply chains in the US, Asia and Europe. However, the Middle East conflict sustained energy costs and inflation concerns, creating headwinds for corporate margins and equity valuations through higher yields and discount rates. Overall, global equities weakened in September, with emerging markets modestly outperforming developed markets: the MSCI Emerging Markets Index fell 0.56%, compared with a 1.19% decline for the MSCI World Index.

• United States equities posted mixed performance in September. The S&P 500 and the Dow Jones declined by 0.45% and 4.29% respectively, while the tech-heavy Nasdaq gained 1.86%. Technology stocks remained resilient amid a volatile environment, supported by continued enthusiasm for AI investment. However, higher bond yields and concerns over energy-driven inflation weighed on the broader market, leaving performance concentrated in large-cap technology companies.
• Europe’s STOXX 600 declined by 2.42%, on the back of higher energy prices which could lead to higher business costs and weaker household purchasing power, weighing on investor sentiment. Energy stocks, however, outperformed during the month as oil prices rose, while banks and industrials ended the month lower. France’s CAC 40 and Germany’s DAX fell by 4.4% and 4.0% respectively.
• Japanese equities delivered modest positive performance in September, with the Nikkei 225 rising by 0.67%. AI-related and semiconductor stocks provided support against a challenging interest-rate backdrop as the Bank of Japan hiked rates.
• Emerging market equities faced competing forces during September. AI-related demand supported technology-heavy Asian markets such as Taiwan and South Korea, where the MSCI Taiwan and the MSCI South Korea rose by 4.51% and 2.03% respectively. Higher oil prices and US interest rates weighed on risk appetite and oil-importing economies. India was particularly affected, with equities recording their weakest month since March as foreign outflows and higher energy costs added pressure, with the MSCI India down by 6.26% over the month. China’s equity markets remained subdued amid weak domestic demand, a fragile property sector and poor investor sentiment over domestic policy support. On the other hand, Brazil’s equities outperformed, supported by expectations of lower domestic interest rates, with the MSCI Brazil posting a return of 3.06% over the month.
• In South Africa, the FTSE/JSE All Share Index ended the month lower by 6.67%, reversing part of August’s gains. Weaker precious-metal prices weighed on local equities during the month, while higher oil prices amid rising domestic interest rates and softer domestic economic activity data added to investor caution.

Fixed income overview

On the fixed income front, the Bloomberg Global Aggregate Bond Index declined by 2.38% over the month. Global fixed income markets weakened as higher energy prices and persistent inflation concerns pushed bond yields higher and prices lower. The Federal Reserve and European Central Bank each raised policy rates by 25 basis points, reinforcing a less supportive environment for bond prices. The US 10-year Treasury yield increased by 54 basis points over the month, from 4.75% to 5.29%, its largest monthly rise since September 2022, as investors reassessed the outlook for interest rates.

(Source: U.S. Department of the Treasury)

South African bonds delivered a modest return of 0.1% in September, as measured by the FTSE/JSE All Bond Index. Higher global yields and renewed inflation concerns weighed on sentiment, while the SARB raised its policy rate to 7.25%. However, improving domestic fiscal fundamentals helped cushion the market against the broader global bond sell-off.

Commodities overview

• Commodity markets delivered mixed performance during the month. While WTI prices were supported by ongoing geopolitical tensions and higher supply risks, a firmer US dollar and higher bond yields reduced gold’s appeal relative to higher interest-yielding assets.
• WTI prices rose by 5.4% to USD 90.4 per barrel, despite signs that Gulf crude exports were recovering from earlier disruptions following drone attacks on critical pipeline infrastructure in Saudi Arabia. Low prospects for a definitive resolution to the Iran conflict and tight fuel markets amid persistent tensions supported elevated WTI prices during the month.
• Gold fell 6.6% to approximately USD 4,156 per troy ounce over the month, as rising oil prices stoked inflation concerns and increased expectations of tighter monetary policy going forward. Higher US Treasury yields increased the opportunity cost of holding the non-yielding asset, rendering it less attractive to investors.

Currencies

• The US Dollar Index, a benchmark which measures the strength of the US dollar against a basket of six major currencies, rose by 2.03% during the month following the interest rate hike by the Fed, as it reiterated its commitment to fighting inflation. This provided support for the US dollar and helped remove a headwind which previously contributed to the greenback’s weakness.
• The yen, which started September on a strong note following a hawkish stance by the Bank of Japan and the joint intervention by Japan and the U.S. in July, weakened later in the month as the US dollar firmed.

In focus: upcoming macro data releases

• 2 October: US employment report
• 14 October: US CPI inflation
• 19 October: China GDP and activity data
• 28 October to 5 November: major central bank decisions (Federal Reserve 28 October, ECB 29 October, Bank of Japan 30 October, Bank of England 5 November)
• 29 October: US GDP and PCE inflation

(Source: BLS, NBS China, BEA, Federal Reserve, ECB, BoJ and BoE; schedule as at 29 September 2026)

Conclusion

September’s market performance reflected the balance between resilient economic activity and increasingly restrictive financial conditions. Strong AI-related earnings and continued infrastructure investment supported selected equities, while energy supply concerns, renewed monetary tightening and higher bond yields weighed on broader markets.

Looking ahead, inflation and employment data, developments in the Middle East and the forthcoming earnings season will be important in assessing whether participation can broaden.

Performance to 30 September 2026

(Source: Morningstar, Investing.com & MAURITIUS COMMERCIAL BANK LTD)

MUR exchange rates are based on the indicative mid-market exchange rate as at the date of this report. Actual rates may vary.

Disclaimer: Intrasia Wealth Ltd (IWL) does not warrant for the correctness and accuracy of the information herein contained which is provided for indicative purposes only. IWL shall not, in any circumstance whatsoever bear responsibility or be held liable for any error, or omission, or any loss which may arise as a result of your reliance upon the present data. Returns for periods greater than one year are annualised.

This article is general market commentary, not investment advice or a personal recommendation. The value of investments can fall as well as rise, and past performance is not a guide to future returns. Written and reviewed under our editorial standards.