Market & Portfolio Update - September 2023
Global share markets gave back some of their gains in September, declining 3.7% in local currency terms, but they remain up 12.1% year-to-date.
Energy companies benefitted from higher oil prices. The industry benchmark, Brent crude oil rose by 10% during the month to US$95 p/b, following the extension of production cuts by Saudi Arabia.
Key central banks around the world met in September, with most leaving their policy rates unchanged, whilst delivering commentary indicating we may see interest rates remain higher for longer, as well as leaving the door open for more hikes if required. Sticky inflation and strong US economic data, which point toward resilient economies and labour markets, are forcing central banks to be cautious.
The “higher for longer” messaging from central banks contributed to a reasonable increase in the yields on longer-dated bonds. Yields on the US 10- and 30-year bonds were up over 0.5% for the month and now sit at levels not seen since 2007.
Rising bond yields weighed on portfolio returns last month (as bond prices and yields are inversely related). However, there is a silver lining - higher yields mean reinvestment rates are now more attractive, supporting the future returns of bond investments.
A look back at when the world feared the worst
On August 2, 1990, the world woke up to a grim headline: “Iraq Invades Kuwait; Oil Prices Soar, Markets Plunge.”
Saddam Hussein's forces had crossed into Kuwait, triggering fears of a prolonged conflict in the oil-rich Middle East.
The immediate market reaction was swift and severe.
Lifetime Book Club: The Let Them Theory
In a world where we spend so much energy trying to control outcomes, manage other people’s opinions, and keep everything on track, this book offers a different approach. One that suggests peace comes not from controlling more, but from letting go.