Monthly Market Update September 2026
Stay informed with the latest news and insights from Oxonian Capital's Monthly Market Update.
September 2026 Update:
MARKET NEWS
EQUITIES:
August was a reassuring month for equity investors. In Europe, the Stoxx 600 rose +0.5% to a fresh all-time high on 11th August, taking this year's gain to +12.9%. The FTSE 100 added +0.2% (+11.7% year-to-date) and Germany's DAX rose +2.5% (+7.2% year-to-date). U.S. equities did even better, with the S&P 500, rising +2.7% to a new high on 13th August, taking this year's gain to +13.1%. The Nasdaq climbed +4.0% (+13.9% year-to-date) and technology companies within the S&P 500 appreciated 6.2% during August. Asian markets were more mixed. Japan's Nikkei rose +3.1% (+32.9% year-to-date) and the broader emerging markets index gained +3.4% (+24.3% year-to-date), while Hong Kong's Hang Seng dipped -1.0% (+2.0% year-to-date) on lingering concerns about China's growth.
Importantly, equity market strength was not confined to a handful of names. Company profits grew strongly across the board in the most recent reporting period, with businesses outside the Mag-7 group of companies growing earnings by +32% year-on-year, albeit some way behind the +112% delivered by those mega-caps. The S&P 500 equal-weight index, a broader sign of U.S. market breadth and strength, is trading close to all-time highs and has outpaced the main S&P index so far this year, by almost 2.5%.
CURRENCY:
The U.S. dollar weakened for a second month, down -0.5% against a basket of major currencies (up +1.1% for the year), partly reflecting investor unease on the administration’s efforts to reduce its borrowing costs. The pound rose +0.5% against the dollar to a three-month high, taking this year's gain to +1.7%, while the euro added +0.8% (still -1.1% for the year).
BONDS:
Bond markets were dominated by rising long-term borrowing costs globally. In the U.S. the government's 30-year yield reached its highest level since 2007, at 5.31% mid-month, while its 10-year yield reached 4.75%. Germany's 10-year yield rose to its highest since 2011, at 3.32%. Despite this, government bonds still delivered small positive returns after yields eased back later in the month. Gilts returned +0.1% in August (-1.5% for the year), U.S. Treasuries +0.3% (-0.5% for the year) and German Bunds -0.5% (-1.1% for the year). Corporate debt fared better, with spreads still at record low levels.
ALTERNATIVES:
Gold and silver were the standout movers among alternative assets, rising +9.7% (to $4,437/oz) and +15.6% (to $66.58/oz) respectively as investors sought a store of value amid bond market concerns. Oil was calmer by comparison, with Brent crude edging up +0.4% to $90.49 a barrel – masking a more volatile month behind the scenes. European gas jumped +18.2%, and wheat (+18.3%) and sugar (+21.5%) also rose sharply, adding to underlying food inflation pressures.
MACRO NEWS
POLITICS:
Early August brought hope of a resolution between the U.S. and Iran, with President Trump agreeing to cancel a planned strike subject to a deal being reached – sending oil briefly below $80 a barrel. No agreement followed, and by mid-month the President said there were no talks ongoing. Iran confirmed the vital shipping route of the Strait of Hormuz would stay closed until the U.S. met its earlier commitments, and the two countries resumed strikes by month-end, with oil prices then rising again.
President Trump announced new tariffs of up to 100% on imported drones and their parts. Meanwhile, talks between the U.S. and Canada collapsed after three days of negotiations, and the U.S. proceeded with 50% tariffs on roughly $28bn of Canadian goods, with Canada matching with its own retaliatory tariffs on over 700 U.S. goods from 8th September. The E.U. meanwhile, announced plans to significantly expand sanctions against Russia.
Investors are turning their attention to the U.S. midterm elections on 3rd November, with the expectation that market volatility will increase in the run-up, consistent with past election cycles. It was a quieter month for U.K. politics, though attention is turning to the Autumn Budget in late-October and the economic backdrop, with Andy Burnham’s honeymoon period coming to an end.
MONETARY POLICY:
Central banks remain focused on balancing growth against still-elevated inflation. Federal Reserve Chair Kevin Warsh sounded firmer on inflation in a closely watched speech at Jackson Hole, calling the Fed’s 2% target a firm, fixed target, and investors ended the month pricing a 65% chance of a further U.S. rate rise in September. The European Central Bank is now expected to raise rates once more before year-end, and the Bank of Japan twice more, as both look to contain inflation. The Bank of England does not meet again until 17th September with U.K. unemployment ticking up and wage growth slowing to its weakest level since 2020 – even as inflation rose to 2.9% on higher energy costs. The two weeks from the 10th September will see all four of these central banks meet in what could be a critical fortnight for bond markets, and in turn equities.
If one theme connected markets in August, it was the rise in the interest rates governments pay to borrow over the long term. This reflected strong growth data from Europe, the U.S. and elsewhere, alongside heavy bond issuance linked to AI investment and a fall in demand from overseas buyers of government debt. On 19th August, the U.S. Treasury unexpectedly said it would at least double the amount of long-term debt it buys back, an attempt to keep a lid on borrowing costs. This eased bond markets into month-end but raised concerns that policymakers may accept lower real returns for savers to manage the government’s debt burden.
CHART OF THE MONTH
Q2 earnings season in the U.S. is now all but complete for the S&P 500 index and with 97% of companies having reported, we have seen annual earnings growth of 52%, the highest since Q2 2021 as the world came out of Covid-19. Why are earnings growth numbers important? The chart on the right below shows the change in forward earnings along with the change in price for the index over the last 10 years. If we ran this chart going back 50 years, the trend would be similar – in that higher earnings tend to lead prices higher long-term, accepting there will always be bumps in that road. Concentration in the index remains a concern, and so it is helpful to look at the left-hand chart showing the breakdown of earnings growth for the Mag-7 companies and the ‘rest’. Whilst there is plenty more ‘tech’ outside the Mag-7, all of which is important for investor sentiment, a growth figure of 31.8% for the other 493 constituents of the index remains very impressive.
Market Data
