September 2024 Market Overview

In September, global financial markets experienced a mixed yet overall positive performance. US equities reached new highs following a 0.50% Federal Reserve rate cut, while China's stock market surged on government stimulus announcements. Geopolitical tensions in the Middle East persisted, with gold reaching record levels and oil prices fluctuating.

The recent decline in the Economic Regime Index indicates increasing economic uncertainty. Historical patterns suggest potential recessionary signals when the index dips below the 0.4 level, as highlighted by the shaded regions and the current 0.39 reading.

Credit default swaps for both European financials and US entities saw slight increases from August while remaining well below their 2022 peak levels, suggesting continued financial stability and reduced systemic risk across both regions.

Interesting — Factors influencing the FTSE/JSE All Share Index

The momentum factor consistently delivers the highest returns across 10, 20 and 30-year periods when analysing the drivers of the FTSE/JSE All Share Index. This persistent outperformance underscores the importance of trend-following strategies in the South African equity market.

Performance

The majority of markets saw positive returns in September, with China's Hang Seng leading the way with an impressive 18.7% gain, followed by the JSE All Share Index at 4.1%. Year-to-date and rolling one-year performance remain in positive territory across most major indices.

Volatility decreased across most indices in September compared to August. The Nikkei saw a sharp decline in volatility while the Hang Seng experienced an increase, reflecting the divergence in market dynamics driven by China's stimulus-fuelled rally.