The September Quarter for 2024 has been marked by a number of economic events that have moved markets both up and down. Stock volatility spiked at the beginning of the quarter after the publication of disappointing economic data which sparked a sharp sell-off across global markets.

There were a number of reasons for the elevated volatility. An unexpectedly weak US jobs report, which raised renewed fears of a recession in the world’s largest economy, hit at the same time as other tensions in the global economy were building. Worries about China’s growth rattled commodities markets from oil to copper, and there were fresh warnings that AI’s promise to benefit global economies was far from being realized, making it hard to justify valuations.

The volatility led to a flight to quality, with bond yields falling and gold hitting fresh highs in US dollar terms. With growth concerns around the US economy, short term bond yields began falling in anticipation that the Federal Reserve would begin its easing cycle. The Federal Reserve didn’t disappoint and cut its policy interest rate by 0.5% at its September meeting.

This was the Fed’s first rate cut in more than four years after holding it at 5.25% to 5.50% for more than a year; its highest level in two decades. Despite the market sell-off in August, the S&P 500 Index has finished the quarter up over 5% and is up by more than 35% for the previous 12 months, hitting new highs on the last day of September.

The Australian share market also closed at a new record high although the economic picture is different to the US. The ASX 200 Index is up over 6% for the quarter and is up 20% for the previous 12 months. For most of this year the Australian market has been driven by banks, with the Financial Sector up over 35% for the year, but this has been hampered by the poor performance of the Resources sector, which is tied to China’s slowing economy.

However, in the last week of the quarter the People’s Bank of China announced measures to bolster the real estate sector and the broader economy. The China policies have broad implications across risk assets, however, one of the most immediate beneficiaries is the resources sector which recouped some of its year-to-date underperformance on the back of rebounding commodity prices.

From fears of a recession to bull market euphoria, this has been a September to remember.

Please click here to review our Investment Committee Report – Quarter 3, 2024.