Economic market update

Equity markets broadly weakened in September as they factored in a range of economic challenges, including rising bond yields, concerns about China’s economic trajectory and expectations around the potential for a sustained period of higher global interest rates. Globally, the MSCI World ex-Australia Index reported a 3.7% decrease and the MSCI Emerging Markets Index fell by 2.2%.

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United States

In the US, economic growth indicators indicated a fairly resilient economy. This is despite equity markets experiencing a decline (the S&P fell 4.9% in the month). The US job market remains solid with a very low unemployment rate of 3.5%

European Union flag


The MSCI AC Europe Index (Unhedged) registered a 3.7% decline in the month. However, the MSCI United Kingdom Index increased by 3.0%, which was attributed in part to reported unexpected easing in inflation.

Inflation figures from the Eurozone also revealed a steeper than expected fall in September – the core inflation rate was 4.3%.

Chinese flag China


China’s economic activity showed signs of stabilising after recent softness. The data for September showed a boost in industrial output, with key indicators of business activity suggesting improved performance in the manufacturing sectors. Challenges, such as elevated youth unemployment, sluggish domestic consumption and softening exports, remain key watchpoints for economic activity.

Australian flag


The ASX 300 fell 2.9% in September. While the energy sector rose by 2.2%, sectors such as real estate, IT and healthcare experienced larger decreases. The Australian inflation rate rose 5.2% in August (year-on-year), driven in part by a rise in food prices and energy costs.

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Currency and Bonds

The AUD was stronger through September than August. The AUD appreciated against several major currencies, recording gains of 2.2% against the Euro, 3.5% against the Pound Sterling and 2.1% against the Yen. However, it depreciated against the US Dollar (down 0.4%).

Bonds delivered negative returns with both Australian and overseas bond yields rising sharply in September, as investors considered the potential that global interest rates might stay higher for longer than was expected. The 10-Year Australian Government Bond yield increased to 4.5%, an increase of 46 basis points. The 10-Year US Treasury Bond yield rose to 4.6%, up 48 basis points over September’s yield.

Read the Market Commentary for August 2023.

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