September turned out to be a negative month for the main global financial markets. Higher interest rates and concerns about the constant increase in the price of raw materials, especially energy supply costs, have brought uncertainty back to the stock markets.

In America, after reaching a new high at the beginning of the month, the S&P500 index fell by 4.80%. Same trend for the Nasdaq which dropped 5.60%, recording the largest monthly loss since March 2020.

Same story in Europe, with Euro Stoxx 50 index down 4.20%. Slightly better Italian FTSE MIB index -1.90%. Bad also German DAX index -3.50%. It should be noted that since September 20 the number of companies making up the German blue chip index has increased from 30 to 40 stocks. The entry of these new 10 companies, mainly from the medical sector, will make the new DAX more “growth” and less “value” than in the past. The aim is to better represent the German economy.

Negative also the Swiss SMI index -6.40%, dropped to the lowest of the last 3 months reaching 11’485 points. Under pressure, in particular, financial and cyclical stocks.

The performance of Asian markets contrasted, with the Hang Seng index down 5.50% while the Tokyo stock exchange gained 3.50%.

Several factors have contributed to the weakness of the stock markets:

  • Increase in inflation, mainly linked to the constant rise in the price of raw materials, with a sharp rise in the cost of energy goods.
  • The US Central Bank as well as the ECB, at their recent meetings, have hinted that they will soon begin to implement a more restrictive monetary policy than has been done so far in response to the pandemic crisis. In America, a reduction in the purchase of bonds is expected from the end of 2021 and an increase in rates by the end of 2022.
  • In China, Evergrande crisis, which is reportedly close to bankruptcy, continues to weigh on the real estate sector after the Chinese government’s new rules regarding real estate companies’ access to bank credit. Moreover, according to the latest data released, the domestic economy is beginning to show signs of slowing down after the strong growth recorded in the first quarter of this year.
  • Economic data in general confirmed a slowdown in the global economy. The massive reduction in investment in 2020 is beginning to be felt, especially with regard to the supply of certain products (semiconductors, chips, raw materials, etc.) and supply problems are mentioned in various industries.

Given the above, volatility could remain high for the coming weeks. Further corrections of the financial markets as well as a consolidation of the lateral movement cannot be excluded.