Tim Edwards, director, index investment strategy at S&P Dow Jones Indices comments on European market performance for September…
The British equity market began the month poorly as polls suggested a potential “yes” vote in Scotland’s referendum; sentiment did not recover with the “no” vote. Instead, Bank of England Governor Mark Carney's statement that a rate increase was “getting closer” and an increasingly unfavourable geopolitical environment pushed the S&P United Kingdom index to a 2.8% loss for September.
The S&P Europe 350 eked out a small gain for the month. While the UK is nearing an exit from its program of monetary easing, economic growth in the major continental economies remains stagnant and Euro-area inflation is at the lowest level in five years. The ground is set for further stimulus to emerge from ECB meeting later this week; the announcement of an “ambitious” asset purchase program is anticipated.
Ten-Year German government bond yields have ticked up from the record lows of August. The S&P Eurozone Sovereign bond index ended September more or less flat. Global leveraged loans (up 2.6%) proved to be a bright spot.
Frontier equity markets continued to shine in September (up 6% in EUR terms) while the S&P Emerging BMI underperformed its Developed counterpart for the first time since February, falling nearly 3%.
Along with a strengthening dollar, commodities fell; gold in particular was down over 5%. Volatility measures in Europe and the US are up