September In Review: First Decline In 12 Months

Australia | Oct 06 2021

Losses in the materials sector drove a -1.9% total decline for the ASX200 in September, putting an end to eleven consecutive months of gains for the benchmark.

-The ASX200 retraced -1.9% (total return) during September
-Value outperformed Growth
-Australian 10-year bond yield increased by 34 basis points
-Iron ore prices slumped by -25.2%, following a -14.3% fall in August 

By Mark Woodruff

After eleven consecutive months of positive performances, the ASX200 closed out September -1.9% lower on a total return basis (including dividends).

Equity markets had to contend with negative sentiment around China, more hawkish Federal Reserve commentary and surging energy prices. In local currency terms, the MSCI World Developed Market World index declined by -3.6%, largely due to a -4.65% fall in the S&P500 in the US. The equivalent Emerging Market index declined by -2.8%.

Global bond yields surged, with 10-year US yields climbing by 24bps to 1.53%, which contributed to the -5.3% fall for the Nasdaq; its worst month since March 2020. The Australian 10-year bond yield increased by 34bps to 1.49%.

Over the course of 2021, market momentum has switched between 'value' and 'growth' on a number of occasions but September saw value stocks relative outperforming by 1.9%. However, it was not a momentum switch across the board with the Materials sector falling by -9.3%, while 'growth' sectors Health Care and Information Technology decreased by -4.9% and -3.9%, respectively.

Meanwhile, the Energy sector rose by 16.7%, Utilities by 2.5% and Financials increased by 1.6%. Hence, it can be concluded the outperformance of 'value' in Australia was broadly carried by the rally in energy stocks, with financials providing additional support.

In large swings on commodity markets, iron ore prices slumped by -25.2% to $US118.5/t, while hard coking coal, thermal coal and uranium prices rose by 39.9%, 25.1% and 24.4%, respectively.

ASX100 best and worst  

September's best performing stocks were Beach Energy ((BPT)) which rose 42.4%, AusNet Services ((AST)) up 30.2%, Woodside Petroleum ((WPL)) 22.5%, Altium ((ALU)) 19.6%, Santos ((STO)) 18.5% and Oil Search ((OSH)) which climbed 17.4%.

On the flipside, the worst performing were Fortescue Metals Group ((FMG)), which fell by -20.7%, Mineral Resources ((MIN)) -18.4%, Magellan Financial Group ((MFG))  -18.4%, BlueScope Steel ((BSL)) -17.1%, Appen ((APX)) -16.6% and BHP Group ((BHP)) which fell by -12.2%.

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