Sabco® Investment's Monthly Market Report - September, 2024

Sabco® Investment's Monthly Market Report - September, 2024

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September 2024 was marked by a notable rebound in global financial markets, driven by synchronized monetary easing, robust policy support from China, and easing inflationary pressures. Despite early-month volatility, investor sentiment improved as central banks took decisive actions to support economic growth.​

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Global equities rose by approximately 2.0% in September, bringing the year-to-date gain to 19.1%. The initial weeks saw declines, particularly in mega-cap technology stocks, amid concerns about a cooling U.S. economy. However, markets rebounded following a 50 basis point interest rate cut by the U.S. Federal Reserve and substantial stimulus measures from China, which bolstered investor confidence.

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In the United States, equities advanced by 2.1% for the month. The Federal Reserve's decision to cut rates by 50 basis points signalled a shift toward supporting the labour market and aiming for a soft economic landing. Economic indicators were mixed: nonfarm payrolls increased by 114,000, below expectations, while the unemployment rate dipped to 4.2%. Consumer spending showed resilience, and inflation continued to moderate, with the core PCE Price Index rising by just 0.1% in August.​

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European equities declined by 0.7% in September as economic growth slowed in the eurozone. The HCOB Flash Eurozone Composite PMI fell below 50.0, indicating contraction, with manufacturing activity particularly weak in Germany. However, headline inflation in the eurozone decreased to 1.8%, below the European Central Bank's target, providing some relief. ​

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In Asia, markets were mixed. Hong Kong's Hang Seng Index surged by 16.6% after the central bank reduced interest rates for the first time in four years, aligning with the Fed's policy and maintaining the currency peg to the U.S. dollar. China's central bank introduced its largest stimulus since the pandemic, aiming to revitalize economic growth and support the equity market.​

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Fixed income markets performed well, with the Bloomberg U.S. Aggregate Bond Index rising by 1.4%. Treasury yields fell across maturities, contributing to positive bond returns. The 10-year Treasury yield notably decreased, reflecting investor expectations of continued monetary easing and moderating inflation. ​

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Commodities had a mixed performance. Crude oil prices declined by 5.6%, influenced by concerns over global economic growth and energy demand. In contrast, gold prices rose by 3.2%, as investors sought safe-haven assets amid ongoing geopolitical tensions and market volatility.​

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Currency markets saw the U.S. dollar weaken against major currencies, driven by the Fed's rate cut and expectations of further easing. The dollar's depreciation provided a boost to emerging market currencies and supported global trade dynamics.​

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Emerging markets experienced a strong month, with the MSCI Emerging Markets Index posting its best performance since November 2023. China's stimulus measures and the Fed's rate cut contributed to improved investor sentiment and capital inflows into emerging market equities. ​

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Geopolitical developments remained a concern, with escalating conflicts in the Middle East and ongoing trade tensions between major economies. These factors continued to influence market volatility and investor risk appetite.​

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In summary, September 2024 demonstrated the significant impact of coordinated monetary easing and policy support on global financial markets. While challenges persist, including geopolitical risks and economic uncertainties, the actions taken by central banks and governments have provided a foundation for cautious optimism among investors.​