September 2020 Market Recap

September 2020 Market Recap

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Anna Rathbun, Chief Investment Officer

After several consecutive months of gains, the global financial markets reversed course during September. The repricing of the equity markets took place as incoming economic data continued to reflect recovery around the world, but we are seeing a slowdown of this rebound as advances in production and consumer activity are starting to plateau. Meanwhile, the coronavirus continued to make its way around the world. Rising infection numbers in European countries have policymakers handling these “embers” at a local level while committing to avoid nationwide shutdowns. These struggles strike at the heart of the COVID-19 challenge for the markets - as infections ebb and flow around the world, investors continue to wonder if our response to the virus might derail the economic recovery. From a policy standpoint, the Federal Reserve seems to be anticipating these challenges. Chairman Powell urged lawmakers in Washington to provide fiscal help to sustain the rebound. But the gridlock over the size of the aid, especially in this divisive political environment, has stymied any effort to pass the second stimulus bill.

Highlights

  • Global equity markets experienced the first down month since March, giving back some gains from the last few months.
  • International equity markets outperformed U.S. stocks by losing less during September.
  • Emerging markets succumbed to the downward market pressure with growing dissonance around the U.S. and China relationship.
  • Monetary policy in the U.S. continued to play an outsized role in the recovery of the fixed income markets.
  • The Fed left the rate policy unchanged during its meeting in September.
  • Until there is confidence to fully open all businesses, there are concerns that the economic recovery may stall or worse, may reverse.

Looking Ahead

As we head into the fourth quarter of this exhausting year, two important factors stand out as having potential to influence market activity. Health experts worry that we may see COVID-19 infection numbers rise in conjunction with the cold and flu season as temperatures fall in the northern hemisphere. Multiple efforts to find a coronavirus vaccine have made rapid progress, but we are not there yet. As long as a vaccine remains out of reach, the infection numbers will influence consumer and business confidence, which links to market confidence. The other factor looming large is the U.S. Presidential Election. There are significant policy differences between the two parties’ platforms, and the rhetoric is highly contentious. Not helping the situation is the controversy around mail-in ballots and the possibility that we may not know who the next leader of the free world will be on election night. Markets prefer certainty over uncertainty, and these events and prospects have the potential to stir up volatility. Therefore, it is important to be thoughtful in the next few months by distinguishing the short-term noise from longer-term fundamentals, avoiding emotional biases toward the market and embracing sound investment discipline.

More Information

For more information on the September 2020 Market Recap, please contact CBIZ Investment Advisory Services.

 

The information included in this update is provided for informational purposes only and should not be construed as investment advice. The views expressed are those of the author based on the data available when this update was written and are subject to change based on market conditions or other factors. CBIZ Investment Advisory Services and/or CBIZ Retirement Plan Services disclaims any liability for any direct or incidental loss incurred by applying information supplied in this update.

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September 2020 Market Recap~/Portals/0/PackFlashItemImages/WebReady/iStock-131957725.jpghttps://www.cbiz.com/Portals/0/liquidImages/WebReady/iStock-131957725.jpgAfter several consecutive months of gains, the global financial markets reversed course during September....2020-10-01T19:08:56-05:00

After several consecutive months of gains, the global financial markets reversed course during September.