Market snapshot: September playing to form

There's been plenty of activity so far this month and lots more for investors to monitor in the coming weeks. ii's head of markets has the latest.

21st September 2026 08:25

by Richard Hunter from interactive investor

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Historically, September is a testing month for markets and, given the wider backdrop, this is largely playing to form at present.

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A volatile week saw only the Nasdaq making any progress of the main indices in the US, with rising Treasury yields and oil prices continuing to put something of a stranglehold on equities. More positively, there was an element of relief from the Federal Reserve’s decision to hike interest rates – seen by many as overdue – although this is not believed to be a “one and done”, but rather the precursor to further rises over the coming months.

With the economy showing a solid labour market, resilient levels of consumer spending (despite many sentiment surveys suggesting otherwise) and the AI buildout continuing apace, it appears that the Fed had little option other than to hike given above target inflation, which has now been the case for over five years. Treasury yields have tightened the pressure, with the 10-year yield over 5% and hitting its highest levels since 2007 earlier in the week, with the bond market strongly providing its own views on inflation.

Meanwhile, the oil price remains elevated and above $100 per barrel after another difficult weekend. Reports of a Houthi attack on Saudi Arabia sent the price higher once more, although this was then reversed on hopes that the Saudi East-West pipeline was nearer to some flows resuming than had originally been thought.

Even so, for US consumers the pressure is being felt at the pump with gasoline prices at around $4.50 per gallon compared to $3.20 a year ago, while other derivative products such as diesel have skyrocketed to record levels where the implications range from transportation to agriculture and construction and many in between.

At this early stage, Dow futures are pointing higher on some optimism ahead of what will be a busy week on the diplomatic front. The US President will attend the United Nations General Assembly before an equally important appointment with the Chinese President on Thursday.

Here, the hopes are related to a cooling of the fractious economic tensions between the two largest global economies, and at the same time for some kind of agreement on proposing an AI notification mechanism, where there was reportedly some progress at the weekend after talks between the US Treasury Secretary and the Chinese Vice Premier. With a shared interest in safeguarding the wider interests of humanity, there could be some scope to lessen the intensifying race towards AI dominance towards which both parties are striving.

In the meantime, the main indices are bruised but still comfortably ahead in the year so far. Gains of 7.5% for the Dow Jones, 11.8% for the benchmark S&P500 and 14.1% for the Nasdaq have been hard-won given the many plates which investors have had to spin in what has a been a tumultuous year across most asset classes.

After a torrid end to the week, the FTSE100 regained some poise in early trade, although insufficient to erase those losses. BP (LSE:BP.) and Shell (LSE:SHEL) provided a small headwind as they followed the oil price slightly lower, although this was offset as a higher copper price underpinned the likes of Antofagasta (LSE:ANTO).

A broker upgrade pushed tech safety firm Halma (LSE:HLMA) higher by more than 2%, while more broadly the strength of the tech trade was reflected by a rise for Polar Capital Technology Ord (LSE:PCT) after the Nasdaq had swum against the tide in the US.

More broadly, gloomy investor sentiment has tested the defensive qualities of the primary index of late, to which there has been limited response although it remains ahead by 7.7% so far this year. The FTSE100 has slipped further from the record closing high set in February, with that milestone now being some 2% away.

Nonetheless, the underlying stability of the constituents, a significant proportion of earnings coming from a US economy which remains in rude health and an average dividend yield of 3.1% across the index, all remain attractive features.

These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

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