TWD Monthly Market Update – September 2026
Broader Market Moves1
Macro Commentary
Financial markets delivered positive returns during August, with US equities outperforming their Australian counterparts. The S&P/ASX 200 returned 1.54% on a total return basis during the month, finishing at 9,075.96, while the S&P 500 returned 2.72% in US dollar terms, closing at 7,686.14. US equities weakened on the final trading day of the month as renewed hostilities between the US and Iran pushed oil prices higher and increased concerns around the inflation and interest rate outlook.
Within Australia, sector performance was uneven during August. Health Care led the market, rising 18.74%, followed by Materials at 12.04%, while Utilities, Information Technology and Energy also gained. In contrast, Consumer Discretionary fell 8.13%, A-REITs declined 7.12% and Financials fell 6.13%. Reporting season provided important context for this divergence, with FY26 results resulting in a 1.1% net downgrade to consensus earnings expectations, although outcomes varied considerably across sectors.
Consumer-facing companies were among the weaker areas, with earnings expectations for Consumer Discretionary revised down 3.2%, as company commentary pointed to increasingly selective and value-conscious consumers. Banks recorded a 3.4% reduction in earnings expectations amid softer mortgage demand, although margins, business lending and credit quality remained comparatively resilient. By contrast, Resources were a notable area of strength, with Metals & Mining and Energy recording earnings upgrades against a supportive commodity backdrop.
Australian economic data released during August continued to show persistent inflation alongside some moderation in labour market conditions. The Reserve Bank of Australia left the cash rate unchanged at 4.35% on 11 August, following three increases earlier in the year, and indicated that inflation was not expected to return to the middle of the 2–3% target range until early 2028. Labour Force data showed employment fell by 16,000 in July, while unemployment rose to 4.5%. Wage growth eased to 3.2% annually in the June quarter.
CPI data released on 26 August showed annual headline inflation eased to 3.5% from 3.8% but was above market expectations of 3.3%. Trimmed mean inflation remained at 3.6%, while non-tradables inflation remained elevated at 4.4%. The data indicated that underlying inflationary pressures remained persistent, despite the moderation in headline inflation.
In the US, employment data released on 7 August showed nonfarm payrolls declined by 23,000 in July and unemployment was little changed at 4.1%, while May and June payrolls were revised down by a combined 103,000 jobs. S&P Global’s flash PMI survey subsequently showed business activity accelerating in August, with the Composite Output Index rising to 56.0 from 54.5 in July, its highest level since April 2022.
Inflation remained a key focus for US markets as well. CPI data showed annual headline inflation eased to 3.4% in July from 3.5% in June, while core inflation was 2.5%. PCE data later in the month showed headline inflation at 3.7% annually, with the monthly increase of 0.2% above the 0.1% consensus expectation, while core PCE inflation was 3.3% annually. At the Jackson Hole symposium on 28 August, Federal Reserve Chair Kevin Warsh reiterated the Fed’s focus on returning inflation to its 2% objective, noting that the predominant focus should remain on prices. By month-end, markets were assigning around a 65% probability to a September rate increase. The Fed subsequently raised rates by 0.25% on 16 September, taking the target range to 3.75–4.00%, with inflation remaining elevated despite resilient economic activity. The Atlanta Fed’s GDPNow model estimated annualised September-quarter growth of 4.6% as at 26 August.
Commodity markets remained volatile during August. Brent crude rose 0.41% over the month, finishing at US$90.49/bbl, with prices rising sharply on the final trading day as renewed US-Iran hostilities increased concerns around global oil supply. Gold rose 8.64%, finishing at approximately US$4,460.87/oz.
Looking ahead, August highlighted the continued tension between resilient financial markets and a challenging economic and policy backdrop. Australian reporting season showed considerable divergence across sectors, while inflation remained persistent in both Australia and the US. Following the Fed’s September rate increase, attention remains focused on whether inflationary pressures will require further tightening, alongside the outlook for economic growth and geopolitical risks surrounding global energy markets. Against this backdrop, maintaining diversified portfolio exposures and focusing on high-quality businesses remains important amid persistent policy and geopolitical uncertainty.
1ASX 200 refers to SPDR S&P ASX 200 Fund (STW), S&P 500 refers to iShares S&P 500 (AUD Hedged) ETF, MSCI World refers to Vanguard MSCI Index International Shares (Hedged) ETF, NASDAQ 100 refers Nasdaq 100 Currency Hedged ETF, AU Comp refers to the Vanguard Australian Fixed Interest Index ETF, Global Agg refers to Vanguard Global Aggregate Bond Index (Hedged) ETF, Gold (USD) refers to the LSEG Gold Spot Price (USD)
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