Following the positivity amid lower volumes witnessed in August, normal service was resumed in September and volatility, back with a bang. Equity returns were mixed across developed markets with this heightened volatility; the most divergent of which came from the East as the Nikkei posted gains of +4.8% and the Australian ASX 200 fell -5.9%. In the US, all three major indices saw losses, with the NASDAQ Composite, S&P 500 and Dow Jones Industrial falling -1.9%, -1.5% and -0.3% respectively, as increased uncertainty surrounding central bank interest rate policy and US Dollar strength weighed on sentiment.
A main focus during September in the UK was of course the Scottish Referendum, as Scotland gave its residents the opportunity to break away from the United Kingdom. In the preceding days, speculation was rife as to the likely outcome and the impact of a potential Yes vote. This led to fervent selling of Sterling and despite a recovery once the No vote had passed, the currency still finished the month -2.3% weaker against the US Dollar. In the week following the Referendum result, the expected relief rally failed to materialise and the FTSE 100 in fact suffered its greatest weekly fall in 15 months, leaving it to finish September down -2.7%. Fixed income didn’t quite benefit from the broader risk off environment with US Treasuries, UK Gilts and German Bunds down -0.6%, -0.7% and -0.2% respectively.