Wealthify doesn't support your browser

We're showing you this message because we've detected that you're using an unsupported browser which could prevent you from accessing certain features. An update is not required, but it is strongly recommended to improve your browsing experience. Find out more about which browsers we support

Month in the Markets: September 2023

A round-up of the latest month in the markets.
The text 'A month in the markets' written on a blue background
Reading time: 6 mins

The Month in a Minute

📰 Overall: September proved to be a volatile month, with rising energy prices leading to increased interest rate expectations and, ultimately, falling prices for bonds and shares.

💪 Benchmark Performance: Performance was in line with benchmarks in September, with Plans still showing healthy outperformance in 2023.

📈 Market Movers: UK FTSE 100 (+2.3%); US shares (-4.9%).

📋 Plan Summary: Plans with a higher allocation to shares performed better than those with a higher allocation to bonds.

🌍 Original Plans: Shares (-0.30%) and bonds (-1.20%) both delivered negative returns.

🌳 Ethical Plans: Shares (-1.37%) and bonds (-0.77%) both delivered negative returns.

⏲ Going Forward: Despite another tough month for markets, we’re already looking for opportunities that are going to have a positive effect on Plans into 2024, including our US bond allocation.

September’s market movements mirrored the conditions we saw in 2022, with rising energy prices leading to increased interest rate expectations and, in turn, falling prices for bonds and shares.

By favouring bonds, our diversified and defensive approach helped protect Plans against the price drops of riskier asset classes. And, although Plan performance was weighed down by the negative impacts of rising US bond yields (the return you get on a bond), we did use this opportunity to take advantage of bond prices that fluctuate more with a change in interest rates.

Rising oil prices and stubborn inflation added to the ‘higher-for-longer’ narrative, where investors anticipate central banks maintaining higher interest rates. This led to rising income returned on investments (yields) and falling prices in bond markets, with the US 10-year government bond yields reaching new highs not seen since 2007.

US bonds were also negatively impacted by sustainability concerns and, as borrowing costs have risen rapidly for the US government, more debt will have to be issued to fund government spending. Although it was eventually avoided, fears of a US government shutdown only added to these worries.

The impact of increasing bond yields had a negative impact on bond and share prices. After a relatively good first half of the year, September ended a third quarter that saw markets become more aware of the effects of restrictive interest rates.

And just like in 2022, this more cautious attitude benefitted the US dollar; the key difference this year being that we’ve started to see a decline in the economic growth outlook. 

In the US, inflation came in higher than expected due to higher costs at the fuel pump, with sharply rising oil prices in September set to reinforce this impact in the next data release. Besides increases in energy related inflation, there were also some increases in more persistent components of inflation, which will matter more to the Federal Reserve (the Fed).

Activity data in the US continued to signal a slowdown, despite a slight uptick in the struggling manufacturing sector.

In Europe, inflation was slightly lower than expected at 5.2%. Core inflation – which excludes energy and other volatile components – crept lower to 5.3%, in line with market expectations. While falling inflation has reduced expectations of further hikes by the European Central Bank (ECB), sticky core inflation means that rates are likely to stay at these levels for the foreseeable future.

Closer to home, there was some very encouraging economic data, with inflation falling to 6.7%, and perhaps more importantly for the Bank of England (BoE), core inflation fell sharply from 6.9% to 6.2%, which was well below expectations.

As a result, the BoE left interest rates unchanged in September, and are only likely to raise them if there are further unwelcome surprises in the data. Given the falling activity data (particularly in the services sector), rates appear to be in sufficiently restrictive territory to put inflation back on track to 2%, without causing unnecessary damage to the economy.


Most major indices posted negative returns in September, causing global shares to decline by -4.3%. Although global bonds offered better protection, they still dropped by -2.9%.

In the developed world, the larger UK FTSE 100 bucked this trend with a gain of +2.3%, as rising oil prices drove energy majors higher. The value of the smaller UK FTSE 250, however, dropped -1.8% in value, as appetite for less risk took its toll.

Japan and Europe also showed mild losses – down -0.4% and -1.7%, respectively – with the former benefitting from further depreciation of the yen. US shares (-4.9%) came under the most pressure in September, as markets grappled with the increasing interest rate expectations, which led to a sharp rise in bond yields.  

As expected in a lower-risk environment, emerging market shares (-2.8%) also delivered negative returns in September. Losses were led by the falling prices of Chinese shares, which continue to underwhelm due to lacklustre economic growth underpinned by a shaky property market.


Once again, investors looked for protection in the US Dollar last month due to its safe-haven status. An increase in interest rate expectations from the Fed also contributed to the currency strengthening (+3.89%) against Sterling. Sterling’s depreciation was a big theme in September, as it lost value to all major currencies over the course of the month, including the euro (-1.30%) and yen (-1.22%).

Better-than-expected inflation data led to a fall in UK interest rate expectations (relative to other countries), leading to a weaker pound. This benefitted our offshore share allocation significantly, justifying our decision to remove the hedge on US shares this year.

Investment type performance breakdown

Shares delivered slightly negative returns (-0.30%) for our Original Plans in September, shielded by sterling’s depreciation against major currencies. Our healthy allocation to the UK FTSE 100 and Japan were key positives, while UK FTSE 250 and US share allocation were key detractors. In sterling terms, Bonds underperformed shares with a return of -1.20% for the month.

Positive returns from our allocation to shorter-dated UK government bonds were only marginally outweighed by losses from our US bond allocation, which we remain confident could add positively to Plans through 2024.

In our Ethical Plans, shares dropped by -1.34%, with growth shares proving more sensitive to rising US bond yields. Bonds posted a modest loss of -0.77%, benefitting from some decent gains in UK ethical corporate bonds.

Money market continues to benefit from higher interest rates, providing positive returns for both Ethical and Original Plans.

Summary with Plan details

Due to September’s uncertain market conditions, Plans with a higher allocation to shares performed better than those with a higher allocation to bonds. As noted, a big part of this was sterling’s depreciation and its positive effect on our share allocations.

Our Investment Team continues to actively monitor the financial markets and their impact on Plans — and are always ready to act in your best interests to events as they unfold.

We are continually evaluating new market information and key market drivers to help keep your Investment Plan on track.

It’s important to remember that it’s normal for markets to go up and down, with periods of volatility to be expected when you invest. As always, we continue to look for opportunities to position your investments, with the goal of protecting your money and achieving your long-term objectives.

Wealthify does not provide financial advice. Please seek financial advice if you are unsure about investing.

Please remember the value of your investments can go down as well as up, and you could get back less than invested. Past performance is not a reliable indicator of future results.

Share this article on:

Wealthify Customer Reviews