Global Market and Economic Summary
Global equity markets extended their gains in September, with many major indices reaching or approaching all-time highs. The rally was supported by a 0.25% cut in the U.S. Federal Reserve’s policy rate to a 4.00%–4.25% range, alongside resilient economic activity that helped sustain already elevated valuations. The S&P 500 and Nasdaq Composite delivered their strongest September returns in 15 years, advancing 3.5% and 5.6%, respectively, fuelled by renewed optimism around artificial intelligence (AI) and continued strength in Mega cap technology stocks. However, escalating U.S. tariffs continued to add to policy uncertainty and contributed to bouts of volatility. Emerging markets (EM) outperformed developed markets (DM) over the month, led by robust gains in China, Latin America and South Korea. Global bond markets also delivered positive returns over the month, as falling yields pushed bond prices up. In the U.S., the yield curve flattened, with long-dated maturities declining more sharply than short- term rates, resulting in longer-duration bonds outperforming shorter-duration instruments.
In other economic news, the global economy expanded at an annualized rate of 3.2% in the first half of 2025, surpassing expectations. An important source of support was the front-loading of trade ahead of higher U.S. tariffs and strong industrial production in emerging markets. Inflation remained a concern globally, influenced by higher fiscal spending and potential tariff hikes. Central banks generally faced challenges in balancing growth and inflation control. Regarding central bank actions, the Bank of England (BoE), European Central Bank (ECB) and the Bank of Japan (BoJ) all kept their interest rates unchanged in September.
South African Market Update
South African equities (+6.6%) continued their strong momentum in September, outperforming DM counterparts, but slightly lagging and EM peers over the month. The trend for 2025 has undeniably been the Resources sector (+28.1%) leading the pack, with the sector recording its best month in almost 2 decades, as both gold and platinum prices are up meaningfully in September. This outsized gain brought it’s year-to-date (YTD) return to 104.9%, causing the index to double in value since the start of the year. Precious metal miners continued to post outsized gains, with Impala Platinum (+40.2%), Northam Platinum (+43.6%) or Sibanye Stilwater (+45.3%) all posting astronomical gains over the month. This environment continues to be difficult for local active equity managers to outperform the benchmark, as the broader market is driven by this sub-sector of stocks. Financials (-1.9%) and Industrials (+1.3%) delivered mixed returns, with index heavyweights Naspers (+7.0%) and Prosus (+11.8%) posting strong returns. The Property sector (-1.0%) posted negative returns in September.
South African bonds (+3.3%) resumed their strong performance, resulting in a quarterly gain of +6.9%. The local bond market benefitted from broad-based demand for Emerging Market Debt (EMD), with the increased demand pushing bond prices higher.