Monthly Market Recap: September’s Surprise Surge
October 09, 2024
Read Time 3 MIN
Overview
September was packed with economic shifts. Both the U.S. and China made bold moves to keep their economies buzzing. The U.S. Federal Reserve gave the economy a push with a 0.50% interest rate cut, while China rolled out a massive stimulus package. This included slashing bank reserve requirements, lowering mortgage rates, and pumping liquidity directly into their stock market. Talk about a double punch!
Meanwhile, artificial intelligence (AI) remained the talk of the town. With promises of game-changing innovations, the excitement is real, though the timeline is still a bit fuzzy. One thing is certain: this tech boom will require a lot more energy. And guess what? Nuclear power is standing tall as the front-runner. China is already leading the charge with over 20 nuclear reactors under construction, targeting a capacity of 25 gigawatts. Even Bill Gates is on board—Microsoft struck a groundbreaking deal with Constellation Energy to revive the Three Mile Island nuclear facility, planning to secure all its energy output by 2028. But it’s not all sunshine. Tensions in the Middle East are heating up, pushing oil prices higher and rattling global markets. And as if things weren’t tricky enough, a massive U.S. dockworker strike, which has since been suspended until January, hit 36 major ports on October 1.
Let’s dig into the specifics.
September’s Surprise Surge
Stocks: A Bright Spot
September was a great month for stocks, especially in China. Large-cap Chinese stocks listed in the U.S. soared over 20%, thanks to China’s bold central bank actions. With Chinese stocks trading at a price-to-earnings (P/E) ratio of 10 (compared to 26 for the S&P 500), we believe there’s still room to grow. The last two decades have shown us that betting against committed central banks is often a losing game.
Closer to home, U.S. large-cap growth stocks jumped nearly 3%, driven by lower interest rates that made growth companies more attractive.
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Bonds: Strong Performance, Especially Abroad
In the bond market, lower interest rates boosted the value of bonds, with the Bloomberg Barclays U.S. Aggregate Bond Index returning nearly 3%. However, the real excitement was in foreign-denominated debt. Emerging market bonds priced in local currencies rose over 8%, benefiting from a weaker U.S. dollar as interest rates fell.
Real Assets: Gold Shines Bright
Gold had a golden month, thanks to falling real interest rates. The U.S. finds itself in a "debt trap," where the federal debt is so massive that typical economic growth can't sustain it. We believe the only way out of this trap is through low or negative real interest rates, where inflation outpaces interest rates, allowing the government to repay debt with devalued dollars. Historically, this has created a bullish environment for gold, and this year has been no exception. That said, don’t be shocked if we see a short-term pullback in gold prices—they’ve been on a tear.
Digital Assets: A Crypto Climb
Bitcoin surged over 8%, and Ethereum followed with a nearly 4% gain. What powered this rise? A combination of the U.S. and China easing monetary policies, stronger-than-expected U.S. economic data, and increased institutional involvement. Traditional banks are now offering custody services for Bitcoin and Ethereum, boosting confidence in the digital asset space.
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Important Disclosures
Please note that VanEck may offer investments products that invest in the asset class(es) or industries included in this blog.
This is not an offer to buy or sell, or a recommendation to buy or sell any of the securities, financial instruments or digital assets mentioned herein. The information presented does not involve the rendering of personalized investment, financial, legal, tax advice, or any call to action. Certain statements contained herein may constitute projections, forecasts and other forward-looking statements, which do not reflect actual results, are for illustrative purposes only, are valid as of the date of this communication, and are subject to change without notice. Actual future performance of any assets or industries mentioned are unknown. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. VanEck does not guarantee the accuracy of third party data. The information herein represents the opinion of the author(s), but not necessarily those of VanEck or its other employees.
The CBOE VIX Index is a calculation designed to produce a measure of constant, 30-day expected volatility of the U.S. stock market, derived from real-time, mid-quote prices of S&P 500® Index (SPX℠) call and put options. On a global basis, it is one of the most recognized measures of volatility -- widely reported by financial media and closely followed by a variety of market participants as a daily market indicator.
There are inherent risks with equity investing. These risks include, but are not limited to stock market, manager, or investment style. Stock markets tend to move in cycles, with periods of rising prices and periods of falling prices.
There are inherent risks with fixed income investing. These risks may include interest rate, call, credit, market, inflation, government policy, liquidity, or junk bond. When interest rates rise, bond prices fall. This risk is heightened with investments in longer duration fixed-income securities and during periods when prevailing interest rates are low or negative.
Investments in commodities can be very volatile and direct investment in these markets can be very risky, especially for inexperienced investors.
Gold investments are subject to the risks associated with concentrating its assets in the gold industry, which can be significantly affected by international economic, monetary and political developments. Investments in gold may decline in value due to developments specific to the gold industry. Foreign gold security investments involve risks related to adverse political and economic developments unique to a country or a region, currency fluctuations or controls, and the possibility of arbitrary action by foreign governments, or political, economic or social instability. Gold investments are subject to risks associated with investments in U.S. and non-U.S. issuers, commodities and commodity-linked derivatives, commodities and commodity-linked derivatives tax, gold-mining industry, derivatives, emerging market securities, foreign currency transactions, foreign securities, other investment companies, management, market, non-diversification, operational, regulatory, small- and medium-capitalization companies and subsidiary risks.
Digital asset investments are subject to significant risk and may not be suitable for all investors. Digital asset prices are highly volatile, and the value of digital assets, can rise or fall dramatically and quickly. If their value goes down, there’s no guarantee that it will rise again. As a result, there is a significant risk of loss of your entire principal investment.
All investing is subject to risk, including the possible loss of the money you invest. As with any investment strategy, there is no guarantee that investment objectives will be met and investors may lose money. Diversification does not ensure a profit or protect against a loss in a declining market. Past performance is no guarantee of future performance.
© VanEck Associates Corporation.
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Important Disclosures
Please note that VanEck may offer investments products that invest in the asset class(es) or industries included in this blog.
This is not an offer to buy or sell, or a recommendation to buy or sell any of the securities, financial instruments or digital assets mentioned herein. The information presented does not involve the rendering of personalized investment, financial, legal, tax advice, or any call to action. Certain statements contained herein may constitute projections, forecasts and other forward-looking statements, which do not reflect actual results, are for illustrative purposes only, are valid as of the date of this communication, and are subject to change without notice. Actual future performance of any assets or industries mentioned are unknown. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. VanEck does not guarantee the accuracy of third party data. The information herein represents the opinion of the author(s), but not necessarily those of VanEck or its other employees.
The CBOE VIX Index is a calculation designed to produce a measure of constant, 30-day expected volatility of the U.S. stock market, derived from real-time, mid-quote prices of S&P 500® Index (SPX℠) call and put options. On a global basis, it is one of the most recognized measures of volatility -- widely reported by financial media and closely followed by a variety of market participants as a daily market indicator.
There are inherent risks with equity investing. These risks include, but are not limited to stock market, manager, or investment style. Stock markets tend to move in cycles, with periods of rising prices and periods of falling prices.
There are inherent risks with fixed income investing. These risks may include interest rate, call, credit, market, inflation, government policy, liquidity, or junk bond. When interest rates rise, bond prices fall. This risk is heightened with investments in longer duration fixed-income securities and during periods when prevailing interest rates are low or negative.
Investments in commodities can be very volatile and direct investment in these markets can be very risky, especially for inexperienced investors.
Gold investments are subject to the risks associated with concentrating its assets in the gold industry, which can be significantly affected by international economic, monetary and political developments. Investments in gold may decline in value due to developments specific to the gold industry. Foreign gold security investments involve risks related to adverse political and economic developments unique to a country or a region, currency fluctuations or controls, and the possibility of arbitrary action by foreign governments, or political, economic or social instability. Gold investments are subject to risks associated with investments in U.S. and non-U.S. issuers, commodities and commodity-linked derivatives, commodities and commodity-linked derivatives tax, gold-mining industry, derivatives, emerging market securities, foreign currency transactions, foreign securities, other investment companies, management, market, non-diversification, operational, regulatory, small- and medium-capitalization companies and subsidiary risks.
Digital asset investments are subject to significant risk and may not be suitable for all investors. Digital asset prices are highly volatile, and the value of digital assets, can rise or fall dramatically and quickly. If their value goes down, there’s no guarantee that it will rise again. As a result, there is a significant risk of loss of your entire principal investment.
All investing is subject to risk, including the possible loss of the money you invest. As with any investment strategy, there is no guarantee that investment objectives will be met and investors may lose money. Diversification does not ensure a profit or protect against a loss in a declining market. Past performance is no guarantee of future performance.
© VanEck Associates Corporation.