Introduction

September 2024 proved challenging for global investors as markets digested mixed economic data, stubborn inflation pressures, and central banks that remained cautious on rate cuts. Rising oil prices and geopolitical risks further unsettled sentiment, leading to declines across major equity indices and a mild selloff in bonds. Defensive positioning and sector rotation dominated portfolio flows, while expectations for monetary easing were pushed further into 2025.

United States

U.S. markets declined in September, with the S&P 500 falling 3.6% and the Nasdaq Composite down 4.1%, marking their worst monthly performance since April. The weakness was driven by higher bond yields, mixed economic data, and concerns that the Federal Reserve would delay its first rate cut into 2025.

The August CPI came in hotter than expected, with headline inflation at 3.7% and core inflation sticky at 3.3%. Fed officials reiterated their commitment to bringing inflation back to target before easing policy. The 10-year Treasury yield rose to 4.53%, its highest level since October 2023.

Europe

European equities underperformed. The Euro Stoxx 50 dropped 3.9% amid political instability in France and weak industrial output across the bloc. Germany’s economic indicators continued to deteriorate, while Southern Europe remained more resilient due to tourism-driven consumption.

The European Central Bank held rates at 3.75% and adopted a cautious tone. Eurozone inflation ticked higher to 2.5%, while core inflation remained above 2.8%. Bond yields rose across the region, and the euro weakened slightly versus the dollar.

Asia-Pacific

Asia-Pacific markets were mixed. Japan’s Nikkei 225 fell 1.5%, though losses were cushioned by a weaker yen and strong earnings from major exporters. The Bank of Japan maintained its ultra-loose stance, but signalled that policy normalisation discussions were ongoing.

China’s markets rebounded modestly. The Hang Seng Index gained 2.2% and the Shanghai Composite rose 1.4%, supported by property sector stabilisation efforts and stronger-than-expected retail sales data. Australia’s ASX 200 declined 1.9% as the Reserve Bank of Australia warned of lingering price pressures, keeping rate cut expectations at bay.

Emerging Markets

Emerging markets posted modest losses in September. The MSCI Emerging Markets Index fell 2.5%, reflecting pressure from rising U.S. yields, a firmer dollar, and weakening trade flows. Dollar-denominated debt underperformed, while local currency bonds fared better in Asia.

India’s Nifty 50 declined 0.9% as investors remained cautious ahead of Q4 fiscal guidance. Brazil’s Bovespa was flat, while Mexico and Indonesia posted small gains, supported by strong macro fundamentals and supportive monetary policy tones.

Commodities

Oil prices surged again in September. Brent crude ended the month at USD 96/barrel, up nearly 6% on the month, driven by OPEC+ production discipline and concerns about supply disruptions in the Middle East. The rally added pressure to global inflation forecasts.

Gold declined to USD 2,360/oz as real yields rose and safe-haven demand moderated. Copper fell 1.5% due to slower Chinese manufacturing growth and cautious global risk appetite.

Fixed Income & Currencies

Bond markets were under pressure globally. The U.S. 10-year Treasury yield climbed to 4.53%, while German bunds and UK gilts saw similar upward moves. Investment-grade spreads remained steady, while high-yield spreads widened modestly.

The U.S. dollar strengthened for the fourth consecutive month. The yen weakened further, approaching levels that triggered prior intervention. The euro lost ground, and EM currencies came under renewed pressure—especially in Latin America and Eastern Europe. The Singapore dollar remained stable amid MAS policy continuity and firm domestic fundamentals.

Outlook

September confirmed that global disinflation is not linear and that central banks are in no hurry to ease policy prematurely. As we enter the final quarter of 2024, investors face a landscape defined by elevated yields, uneven growth, and persistent geopolitical risk. Volatility is likely to remain elevated, especially around earnings season and key inflation data releases.

Brightness Capital continues to favour a balanced, flexible positioning. We maintain a bias toward quality equities, short-to-intermediate duration fixed income, and commodities with favourable supply-demand dynamics. Risk management and active allocation will remain central to navigating the final stretch of the year.