September’s investment market commentary

September saw a reversal in market fortunes, with riskier assets underperforming safe havens, as Andrew Yeadon’s update explains.
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Published 5 October
3 mins

September saw a reversal in market fortunes, with riskier assets underperforming safe havens. Over the month, analysts became increasingly concerned that the spread of COVID-19 across Europe just as it heads into autumn might necessitate more restrictions that would obstruct the recovery. However, as cases rose, markets also took some encouragement from reports of new and better treatments, progress on vaccines and an apparent reduction in death rates.

The US election was also in sharper focus as postal votes began to be cast and the first presidential debate descended into a very “un-presidential” mud-slinging contest. While most agree that Donald Trump has been a disastrous leader of the free world, domestic tax cuts and deregulation have been quite investor friendly, particularly for US equities. Should Joe Biden win the November 2020 election, he will promote an agenda that will reverse many of Trump’s policies. As an experienced global statesman, Biden will work to restore America’s place in the world, and heal the international rifts left by Trump. However, he will also raise taxes, increase regulation and expand social welfare through an agenda that will be less friendly towards the wealthy and financial markets.

News on Brexit was relatively disappointing, with the apparent impasse on state subsidies, the Irish border and fishing rights aggravated by the passing of a bill through the UK House of Commons that appears to backtrack on key issues agreed in the Withdrawal Agreement signed in late 2019. This only served to deepen the divide between the UK and the EU as the saga heads into the last few months of the Transition Period.

In line with most other risk assets, equity markets were under pressure in September. However, the weakness of the pound offset local currency losses which allowed the MSCI AC World Index to post a modest gain of +0.3% in Sterling terms. Among the larger markets, Japan (+4.6%) topped the performance table, while the UK (-1.5%) and US (-0.3%) brought up the rear. At the sector level, although somewhat mixed, defensives tended to perform better than cyclicals, although two of this year’s standout leaders ,Information Technology and Communication Services, underperformed. Over the month, Industrials (+2.9%), Utilities (+2.8%), Materials (+2.5%) and Consumer Staples (+2.2%) performed the best, while Energy (-8.8%), Financials (-1.9%), Communication Services (-1.7%) and IT (-0.1%) all underperformed. From a style perspective, there was little to choose between Value (+0.5%) and Growth (+0.2%), while Smaller Companies (+1.5%) marginally outpaced Larger Companies (+0.3%).

With concerns rising that the resurgence of COVID-19 cases would impact the economy, safe havens were in demand. Within fixed income, high quality government bonds fared better than the riskier (but higher yielding) segments of the market. Over September, the JP Morgan Global Government Bond Index gained +0.7%, the ICE Merrill Lynch Global Corporate Investment Grade Index was flat (0.0%), the Merrill Lynch Global High Yield Index lost -1.1% and the JP Morgan Emerging Market Bond Index slipped -1.7% (all hedged to Sterling).

Worries that increased COVID-19 cases could potentially stall the economic recovery over-shadowed commodity prices, which had mixed fortunes when viewed from a Sterling perspective. Over the month, the Bloomberg Commodities Index gained +0.1% in Sterling terms, with Crude Oil (-2.8%) and Gold (-0.7%) losing ground, while Agriculture (+7.2%) and Industrial Metals (+0.7%) outperformed.

In the foreign exchange markets, the pound was one of the world’s weakest currencies, while the Japanese Yen, Chinese Renminbi and US Dollar all stood out for their strength. Against the pound, the Dollar, Yen and Renminbi rose +3.3%, +3.7% and +4.1% respectively.

(Notes: All monthly data is quoted in Sterling terms unless otherwise stated).

FTSE 1005963.575866.1
DJ Ind. Average28430.0527781.7
S&P Comp3500.313363
Nasdaq 10012110.711418.06
£ Base Rate0.100.10
Brent Crude45.2842.3

This month’s values quoted as at 30/09/2020. The above values are sourced from Bloomberg and are quoted in the relevant currency.

Clients of Nedbank Private Wealth can get in touch with their private bankers directly to understand how their portfolios are responding to market events or call +44 (0)1624 645000 and speak to our client services team.


If you would like to find out more about how we help manage clients’ investments, please also contact us on the number above. Or you can get in touch using the links to the forms towards the end of this page.

Investments can go down, as well as up, to the extent that you might get back less than the total you originally invested. Exchange rates also impact the value of your investments. Past performance is no guide to future returns. Any individual investment or security mentioned here may not be suitable, and is included for information only and is not a recommendation. You should always seek professional advice before making any investment decisions.

about the author

Andrew Yeadon

Andrew Yeadon

Andrew joined in 2012, following 11 years with Schroders Investment Management, where he formed their multi-manager team. Prior to joining Schroders, Andrew spent 12 years at Brinson Partners (now part of UBS) where he progressed from graduate trainee to head of European equity strategy and portfolio construction.


His responsibilities include heading the London-based investment team, and chairing both the International Strategy Committee and the International Investment Committee. Andrew is also part of the international investment team for Nedgroup Investments, a sister company of Nedbank Private Wealth.

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