Market's Overview:
Global markets moved lower during September as several factors combined to weigh on investor sentiment. Rising oil prices increased concerns about inflationary pressures, while higher government bond yields reflected ongoing uncertainty around future interest rate settings. At the same time, investors continued assessing the strength of global economic growth as conditions varied substantially between regions.
Despite the weaker headline result, market performance was far from uniform. Technology-related sectors continued to receive support from ongoing investment in artificial intelligence infrastructure, while Japan benefited from company-specific and structural factors. In contrast, Europe, China and commodity-linked markets experienced greater pressure as concerns around economic activity and demand growth intensified.
Key Performance Summary:
United States:
US markets were relatively resilient compared with many international peers. The S&P 500 finished modestly lower, although technology shares continued to perform strongly, allowing the Nasdaq Composite to record a gain for the month.
Artificial intelligence remained one of the dominant themes influencing markets. Major technology companies continued investing heavily in data centres, advanced computing infrastructure, semiconductors and cloud services, reinforcing expectations that AI-related spending will remain a significant driver of corporate activity in coming years. As a result, investors continued to differentiate between companies expected to benefit directly from these trends and those facing slower earnings growth.
Economic data released during the month presented a mixed picture. Labour market conditions remained relatively healthy, while investors continued to monitor inflation indicators and Federal Reserve commentary for clues regarding the future path of monetary policy. Bond yields moved higher during the month, reflecting ongoing uncertainty about how quickly inflation may return to central bank targets.
Europe:
European equities experienced a difficult month, recording one of the weakest regional performances among major developed markets. Investors remained focused on the region's economic outlook, particularly given ongoing challenges facing manufacturing activity and industrial production.
The rise in energy prices was another important influence. Higher oil prices contributed to concerns about input costs for businesses and broader inflationary pressures across the region. Industrial companies and export-oriented sectors remained sensitive to global demand trends, particularly developments in Asia and China.
Investors also continued monitoring economic indicators across the eurozone and the United Kingdom as markets assessed whether growth could accelerate over coming quarters. While conditions varied by country, the overall tone remained cautious throughout much of September.
Asia:
Asian markets delivered mixed results, reflecting the significant differences between Japan and China during the month. Japan was one of the strongest-performing major markets globally. Continued corporate governance reform, shareholder-focused initiatives and improved capital management remained supportive themes. Investors also responded positively to ongoing improvements in company profitability and earnings quality. Japan's important role within global technology and manufacturing supply chains continued to attract investor attention.
China faced a more challenging environment. Economic data released during the month fell short of expectations in several areas, reinforcing concerns about domestic demand, consumer confidence and activity within the property sector. These developments contributed to weakness in Chinese equities and influenced broader sentiment across emerging markets. The differing performances of Japan and China highlighted the increasingly selective nature of global investors, who are focusing more heavily on country-specific fundamentals rather than treating Asia as a single investment theme.
Australia:
Australian shares declined during September, reflecting weakness across both resources and broader market sectors. The local market was influenced by a combination of softer global sentiment, rising bond yields and concerns surrounding the outlook for Chinese economic growth. Resource companies faced pressure as investors assessed the implications of weaker Chinese activity for future commodity demand. Although energy prices strengthened significantly during the month, this was insufficient to offset broader weakness across parts of the resources sector. Domestic economic data remained a focus, particularly inflation, employment and consumer activity indicators. Investors continued to monitor Reserve Bank of Australia commentary as expectations for future policy settings evolved alongside incoming economic data.
Commodities:
Commodity markets experienced significant divergence during September. Oil was one of the strongest-performing major asset classes, rising sharply as markets assessed supply dynamics and geopolitical developments affecting energy markets. The increase in oil prices returned attention to energy security and global supply conditions. Higher energy prices have broad implications for transportation, manufacturing and industrial activity, making oil an important economic indicator beyond the resources sector itself. Gold moved in the opposite direction, declining significantly during the month. The fall reflected changing market expectations around interest rates and bond yields, which can affect demand for precious metals. Industrial commodities delivered mixed results as investors weighed concerns regarding Chinese demand against longer-term infrastructure and manufacturing trends.
Bonds:
Bond markets weakened during September, with Australian government bonds delivering a negative return as yields moved higher. Markets continued to reassess expectations regarding inflation, economic growth and future central bank policy decisions.
Government bond yields increased across several developed economies during the month, reflecting uncertainty around how quickly inflationary pressures may ease and when central banks may be in a position to adjust policy settings. These yield movements were an important influence on broader financial market performance throughout September.
Economics:
Several competing economic themes shaped market behaviour during the month. On one hand, ongoing investment in artificial intelligence infrastructure and digital technologies continued to support parts of the corporate sector. On the other, rising energy prices and higher bond yields created concerns that economic growth could moderate in some regions.
Economic data across major economies remained mixed. Employment conditions generally remained stable, although investors continued to monitor manufacturing activity, consumer spending and inflation indicators closely. Markets remained highly sensitive to economic releases that could alter expectations regarding future monetary policy decisions.
China's economic performance remained a particularly important consideration given its influence on global trade, manufacturing activity and commodity demand. Developments in the Chinese economy continued to have flow-on effects across numerous international markets.
Politics:
Geopolitical developments featured more prominently during September, particularly through their impact on energy markets. Concerns regarding global supply conditions contributed to the sharp rise in oil prices and increased attention on energy security issues.
Trade policy, industrial strategy and efforts to secure critical supply chains also remained important themes globally. Governments across major economies continued pursuing initiatives aimed at strengthening domestic manufacturing capabilities and improving access to strategic resources and technologies.
While political developments remained an ongoing source of uncertainty, market participants generally remained focused on their economic implications, particularly regarding inflation, energy costs and international trade flows.
Outlook:
As markets move into the final quarter of 2026, attention is likely to remain centred on inflation trends, central bank policy decisions, economic growth data and corporate earnings results. Recent movements in energy prices and bond yields will continue to be closely monitored given their influence on broader market conditions.
Artificial intelligence remains a significant structural theme underpinning investment, business spending and corporate earnings expectations, while developments in China are likely to continue influencing commodity markets and global growth forecasts.
September demonstrated that different regions and sectors can perform very differently even within the same market environment. As a result, investors will continue watching both global macroeconomic developments and company-specific fundamentals as markets navigate the final months of the year.
If you would like to talk about how these matters might affect your own investments, or if you have any questions about this update, please feel free to contact me. I am always happy to explain things in plain language and help tailor the discussion to your personal circumstances.
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FAQs
How did markets perform in the September 2026 market update?
Global markets moved lower in September 2026, with the MSCI World Index falling 1.9%. Rising oil prices, higher government bond yields and uncertainty about global economic growth weighed on investor sentiment. Performance varied widely by region, with Japan and US technology shares posting gains while Europe, China and commodity-linked markets fell.
Why did the ASX 200 fall in September?
The ASX 200 declined 3.4% in September as softer global sentiment, rising bond yields and concerns about Chinese economic growth weighed on the local market. Resources were a key drag, with the ASX Resources sector falling 4.0% as investors assessed the impact of weaker Chinese activity on future commodity demand.
Why did oil prices rise so sharply in September?
Brent crude rose 14.0% in September, making oil one of the strongest-performing major asset classes for the month. The increase was driven by supply dynamics and geopolitical developments affecting energy markets. Higher energy prices matter beyond the resources sector because they flow through to transport, manufacturing and broader inflation.
Why did the gold price fall in September?
Spot gold fell 8.5% in September, moving in the opposite direction to oil. The decline reflected changing expectations around interest rates and rising bond yields, which can reduce demand for precious metals.
Which markets performed best in September?
Japan was one of the strongest major markets, with the Nikkei 225 rising 6.5% on the back of corporate governance reform, improved capital management and stronger company profitability. In the US, the Nasdaq Composite gained 1.9% as ongoing investment in artificial intelligence infrastructure continued to support technology shares.
What should investors watch in the final quarter of 2026?
Key areas of focus include inflation trends, central bank policy decisions, economic growth data and corporate earnings results. Movements in energy prices and bond yields, developments in China and the ongoing AI investment cycle are also likely to influence markets. To discuss how these conditions may affect your own portfolio, speak with your Morgans adviser.
Disclaimer
This report was prepared by Scott Fraser through independent research facilities as a private communication to clients and was not intended for public circulation, publication or for the use of any third party, without the prior written approval of Scott Fraser. It does not constitute advice to any person. The views expressed here are those of the author and do not necessarily reflect those of Morgans Financial Limited (ABN 49 010 669 726), its related bodies corporate, directors and officers, employees, authorised representatives and agents (“Morgans”). Morgans may publish research on the company/s named here, which will be forwarded on request. While this report is based on information from sources which Scott Fraser considers reliable, its accuracy and completeness cannot be guaranteed. Any opinions expressed reflect Scott Fraser's judgement at this date and are subject to change. Morgans does not accept any liability for the results of any actions taken or not taken on the basis of information in this report, or for any negligent misstatements, errors or omissions. This report is made without consideration of any specific client’s investment objectives, financial situation or needs. It is recommended that any persons who wish to act upon this report consult with their investment adviser before doing so. This report does not constitute an offer, or invitation to purchase, any securities and should not be relied upon in connection with any contract or commitment whatsoever.
