Equity markets took a breather in September following recent strong gains with the US market down 3.9% due to concerns about congressional approval for additional stimulus and uncertainty about an orderly resolution to the upcoming US Presidential election.
The Australian market followed the US lead, falling 4%, with healthcare the only major sector showing a positive monthly return. Other global markets were more subdued with the UK down 1.6% and Europe fairing a touch better down 0.8%.
In response to the “risk-off” environment, the USD rallied against other major currencies with the AUD falling 3.2% against the greenback to finish around 71c at month’s end. The local unit was also not helped by the growing expectations that the RBA may soon cut rates from 0.25% to 0.1%. Bond yields fell over the month as investors sought refuge from the volatility in equity markets seemingly unfazed by supply concerns from record bond auctions to finance burgeoning government deficits.