September was another month in which investors were required to balance resilient market performance against persistent inflation, elevated interest rates and ongoing geopolitical uncertainty. Whilst equity markets generally remained supported by strong corporate earnings and continued investment in artificial intelligence and technology, concerns around inflation, energy security and global conflict continued to influence investor sentiment.
Market returns
| Asset class | 1 Month % | 3 Months % | 1 Year % | 3 Years % | 5 Years % |
| Defensive Asset Classes | |||||
| Cash | 0.36 | 1.11 | 4.06 | 4.22 | 3.34 |
| Australian Bonds | -0.86 | -1.51 | -0.40 | 3.56 | 0.00 |
| International Bonds | -1.66 | -2.42 | -0.57 | 3.58 | -0.52 |
| Growth Asset Classes | |||||
| Australian Shares | -2.42 | 1.33 | 2.68 | 11.40 | 7.68 |
| International Shares | 1.85 | 1.45 | 9.87 | 19.53 | 12.82 |
| Listed Property – Australian | -1.86 | -8.36 | -14.09 | 9.34 | 2.91 |
| Listed Property – International | -2.81 | -6.49 | -2.64 | 6.79 | 1.36 |
As at 30/09/2026
Economic environment
Global economic growth remained positive during September, although the pace of expansion continued to vary significantly between regions. Business investment and technology spending remained supportive of growth. However, central banks and financial markets remained highly focused on inflationary pressures and their implications for future monetary policy decisions.
Inflation continues to be a significant challenge across many developed economies. Elevated energy costs, wage pressures, housing shortages and government spending continue to contribute to inflationary concerns. This limits the ability of central banks to meaningfully ease monetary policy settings. A recent publication from the International Monetary Fund (IMF), title “World Economic Outlook, April 2026: Global Economy in the Shadow of War,” identified inflation, geopolitical fragmentation and conflict-related disruptions as key risks to the global outlook.
Australian economy, inflation & interest rates
Inflation remains a core economic issue in Australia and continues to be a primary focus of the Reserve Bank of Australia (RBA). Cost of living pressures remain evident across essential household expenses, including housing, insurance, utilities and services. According to many Australian economists and the RBA, Government spending is also a key driver of inflationary pressures. The Treasurer, Dr. Chalmers, rejects these claims.
As a result of inflationary pressures, Australian interest rates remain elevated and restrictive. The RBA continues to prioritise containing inflation and ensuring inflation expectations remain anchored. Financial markets remain sensitive to inflation data releases and any indication regarding the future path of interest rates.
For households, higher borrowing costs continue to place pressure on mortgage repayments and discretionary spending. At the same time, investors and retirees have benefited from higher cash account and term deposit rates. This is due to the higher yields fixed income investments continue to offer.
Given inflation remains persistent, interest rates are expected to remain higher for longer, with policymakers focused on achieving sustainable price stability before considering any significant change in policy direction. Whilst good from a portfolio income perspective, higher inflation and interest rates will continue to provide significant headwinds for portfolio growth.
Geopolitical developments
Geopolitical risks remained a prominent feature of market discussions during September. Ongoing tensions in the Middle East, concerns regarding global energy supplies, trade disputes between major economies and broader geopolitical fragmentation continued to create periods of market volatility.
Investors also continued to monitor the potential economic impact of increased defence spending, supply chain disruptions and changing global trade relationships. These developments remain important drivers of commodity prices, inflation expectations and overall market sentiment.
Investment market performance
Global share markets generally delivered positive returns throughout September, supported by ongoing strength in technology-related sectors and continued investor confidence in businesses exposed to artificial intelligence and productivity-enhancing innovation.
Australian equities experienced a challenging month as the S&P/ASX 200 Index fell 3.1%, marking its first negative calendar month since March. Persistent domestic inflation data fuelled economic anxiety and reinforced expectations of a higher-for-longer interest rate environment from the Reserve Bank of Australia. That said, a softer-than-expected August CPI reading late in the month provided some minor relief.
Fixed income markets continued to offer attractive income opportunities for investors. Higher bond yields have reinforced the role of fixed interest investments within diversified portfolios and have provided a meaningful source of income and portfolio diversification.
Summary
September reinforced several themes that have defined investment markets throughout 2026: persistent inflation, elevated interest rates, resilient equity markets and ongoing geopolitical uncertainty. While market volatility is likely to remain a feature of the investment landscape, maintaining a disciplined, diversified and long-term investment approach remains the most effective strategy for navigating changing market conditions.
This update is general information only and does not consider your personal objectives, financial situation or needs. You should consider the appropriateness of any strategy in light of your circumstances and seek professional financial advice before making investment decisions.