Despite a weak start, US equities ended the month once again as good as unchanged.

During the first fortnight of September, US equities fell by as much as 2% on concerns the Fed would soon be hiking its rate and on the decline in oil prices. Oil prices fell further after the International Energy Agency said that global oil demand growth was slowing at a faster pace than initially predicted.

The market, however, rebounded during the second fortnight as the Fed lowered its rate outlook and oil prices rebounded on the news that OPEC members had reached a first agreement aimed at reducing oil supply. 

While the Energy sector was the best performer in September, financials had been performing poorly.  Investors were seen selling financials on concerns Deutsche Bank would be in trouble, after the US Department of Justice imposed a heavy fine related to a probe tied to residential mortgage-backed securities.

  • We have made several significant changes in our sector allocation.We reduced positions in Consumer Staples and slightly in Industrials, reinvesting the proceeds mainly in Healthcare, Materials, Consumer Discretionary and Energy.

  • We raised or initiated positions in, inter alia, Apache, Abbott, Amgen and Johnson & Johnson, while reducing positions in, for instance, Colgate, Pepsi and Stanley Black & Decker.

  • The IMF expected world economic growth forecast of around 3.1% in 2016 and 3.4% in 2017 seems very challenging in the current environment.

  • Brexit, the US presidential election, Central Bank behaviour and Greece could all impact stock markets going forward, although we think those risks are relatively limited.

We are, instead, focusing more on the stabilising and even slightly improving global economic growth.



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