Australia | 2:06 PM
This story features CSL LIMITED, and other companies.
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The company is included in ASX20, ASX50, ASX100, ASX200, ASX300 and ALL-ORDS
Rising inflationary pressures, higher bond yields and central bank rate hikes defined September for equities, weighing on the ASX.
- September sell-off ends the ASX’s five-month winning streak
- Healthcare shines as Technology and Materials retreat
- Value stocks outperform Growth as interest rate pressures build
- AGM season puts earnings outlooks and valuations back in focus
By Danielle Ecuyer
The market giveth and the market taketh
While spring emerged, the S&P/ASX200 failed to ignite the same enthusiasm in September, retreating by -3.16% but once dividends are including the loss shrinks to a total return of -2.4%.
Identifying three major trends, the standout factors include a global upward push in bond yields; relative underperformance by interest rate-sensitive sectors; and domestically, some $31bn in dividends received from September 1 to Oct 2.
As noted by Macquarie, September marks the first negative month for the index since the March sell-off, as the Australian 10-year yield rose 28bps (US yields lifted 53bps), the USD strengthened, with the Australian dollar down -3.1% against the greenback; and oil prices rose as Middle East tensions flared again.
Brent Crude rose 16.11% to US$102.51/bbl at the end of September.
CommBank notes the USD rose 2% in September against all major currencies, except the Japanese yen and the Chinese yuan. The major driver was a “sharp” upward reconsideration of the Federal Reserve’s rates policy.
A combination of stronger August non-farm payrolls data and a rise in the core CPI to 0.3% m/m heightened traders’ expectations for a September rate hike and new Fed Chair Kevin Warsh & Co didn’t disappoint.
The Federal Funds rate lifted 25bps mid-September, the first hike rise since 2023. US 10-year bond yields hit 24-year highs.
This all amounts to an inflationary cocktail impulse for Australia. The RBA, as widely expected, hiked its cash rate at the September 29 meeting.
The November 3 RBA meeting remains live, with market pricing for another rate hike still in focus.
Macquarie points out the probability of a fifth rate hike at the Melbourne Cup Day meeting is currently implied at 22%. This broker expects a “hawkish hold”, but Governor Michele Bullock and her team of policymakers at the central bank have communicated clearly they will raise further if needed.
Equally important, the RBA has signalled it will wait to see how the first four rate hikes thus far in 2026 impact.
Two macro dates for the diary include the RBA September minutes on Oct 13 and the next CPI print (September quarter) on Oct 28. The RBA remains data-dependent, with the primary goal being to get inflation down.
Morgan Stanley also pointed to the end of a five-month winning streak for the ASX in September, emphasising higher domestic and global bond yields impacted equity valuations, while worries around higher inflation heightened concerns of more RBA rate hikes.
Global rate hikes remain on the agenda. Morgan Stanley Wealth Management states:
“Resilient growth and renewed energy pressures are pushing the Fed, ECB and BOJ toward higher rates.
“The paths differ, but the implication is similar—more tightening than markets expected earlier this year, alongside a firmer US dollar.”
Ed Yardeni, of Yardeni Research, includes another driver: “the bond vigilantes have gone wild worldwide, pushing government bond yields higher in developed and emerging markets alike”.
It wasn’t all gloomy for the Australian share market
Back home, Healthcare was the top performing sector with a total return of 4.4%, with CSL ((CSL)) shares rising 8.8% and adding 27bps to index returns. Ansell ((ANN)) was the top-performing healthcare stock, up 11.9%, with Ramsay Health Care ((RHC)) gaining 9%.
After a bruising FY26 performance, Healthcare has picked up its moniker as a defensive sector for investors since. The sector is up 25.6% for 1Q27 though still down -3.2% year-to-date in 2026.
Technology continued to carry the wooden spoon, which is ironic given the Nasdaq Composite continued to reach for new highs in September, gaining 1.86% and 2.47% for the quarter. Much can be attributed to the rotation back into Big Tech while cybersecurity stocks continue to knock on all-time highs.
Xero ((XRO)) shares fell -33.5% in September, leading the decline for the InfoTech sector, which fell -10.76%. Year-to-date 2026 the sector is down -22%.
Codan ((CDA)) was an outlier in the sector, its shares rallying 41% to become the top-performing ASX100, 200 and 300 stock. The company’s exposure to the high-demand war zones has placed it in the tailwinds of strong growth.
Conversely, much of Australia’s technology exposure is SaaS-facing, with higher bond yields weighing on valuations. In addition, Meta’s launch of personal AI agent, Muse, has undermined confidence in a suite of global technology stocks, including internet-facing companies in travel.
NextDC ((NXT)) shares fell -21.9% and WiseTech Global ((WTC)) -19.8%. Megaport ((MP1)) and 4DMedical ((4DX)) bucked the trend, rising 24.85% and 24.27%, respectively.
After a year of relative outperformance, Materials took a step back, falling -7.25%, with weakness across Golds, down -4.18%, as well as Metals & Mining, down -7.41%.
Materials turned into a -166bps drag on the index, with BHP Group ((BHP)) accounting for -76bps.
Rising bond yields and a stronger USD have weighed on the gold price, down -6.11%, and Silver, down -7.09%. Nickel and Zinc traded down -5.88% and -2.77%, respectively, over the month.
Iron ore, U308, Copper and Aluminium managed to finish in the green.
Interestingly, Banks fell less than the ASX200, down -1.34%, as did A-REITs, down -1.89%.
Morgan Stanley highlights a mixed performance from the bank stocks. CommBank ((CBA)) detracted -55bps, while ANZ Bank ((ANZ)), Westpac ((WBC)) and National Australia Bank ((NAB)) all remained positive contributors.
As indicated by Macquarie, higher rates did weigh on Consumer Discretionary, down -3.91%, and Utilities, down -4.35%.
Energy, unsurprisingly, gained 0.5% in September, boosted by Santos ((STO)), up 6.2%.
Other strong performing stocks in September included AMP Ltd ((AMP)), Cogstate ((CGS)), Cuscal ((CCL)), Dyno Nobel ((DNL)), Ingenia Communities Group ((INA)), and Maas Group ((MGH)).
Macro drivers and key factors for the market
Valuations generally retreated, with the ASX200 forward multiple still considered “elevated” by Morgan Stanley at 17.2x. Three-month earnings forecast revisions have been negative across Materials, Industrials and Consumer Discretionary.
As such, the market will remain both sensitive and reliant on earnings outlook and growth against an RBA tightening cycle. Morgan Stanley believes the earnings risk remains to the downside and the upcoming AGM season is likely to shed some light via trading updates.
Notable expected trends include the impact of higher oil prices as a “pressure point” for all sectors, impacting margins. At risk are consumer sector-facing businesses and banks, where investors are increasingly looking to loan growth and loan quality. REITs and housing-related stocks are also in focus, as higher mortgage rates and falling property prices impact.
The trend of Value beating Growth continued, by 45% points in Australia. Macquarie explains the latter is more likely to be affected by rising bond yields.
The broker’s FOMO Meter fell to 0.76% from 1% FOMO at the end of August.
The decline was attributed to the decline in breadth across the S&P500. Net 7.4% of stocks are now below their 200-day moving average, from over 37.7% above. Nevertheless, investor sentiment remains positive and Macquarie reminds investors the best buying opportunities are when sentiment is negative, or at least neutral.
In the US too the more interest rate-sensitive sectors have been under pressure.
The S&P500 is -1.0% below its August 13 record high, and the S&P500 is down -5.9% from its August 14 record high. The Russell 2000 is down -7.7% from its August 14 record high.
Concerns around US market concentration have re-emerged, with the MAG7 up 10.1% versus the S&P500 up 12.8% since the start of 2026.
For those feeling concerned about October, chief investment strategist at RIA Advisors and US market commentator Lance Roberts reminded investors:
“OCTOBER: This is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August, and February.” – Mark Twain
ASX100 Best and Worst Performers of the month (in %)
| Company | Change | Company | Change |
|---|---|---|---|
| CDA – CODAN LIMITED | 41.02 | XRO – XERO LIMITED | -31.31 |
| ANN – ANSELL LIMITED | 11.04 | PLS – PLS GROUP LIMITED | -28.52 |
| AMP – AMP LIMITED | 9.24 | IGO – IGO LIMITED | -25.20 |
| RHC – RAMSAY HEALTH CARE LIMITED | 8.58 | LTR – LIONTOWN LIMITED | -24.08 |
| DNL – DYNO NOBEL LIMITED | 8.47 | NXT – NEXTDC LIMITED | -21.58 |
ASX200 Best and Worst Performers of the month (in %)
| Company | Change | Company | Change |
|---|---|---|---|
| CDA – CODAN LIMITED | 41.02 | ELV – ELEVRA LITHIUM LIMITED | -31.52 |
| SRL – SUNRISE ENERGY METALS LIMITED | 33.96 | XRO – XERO LIMITED | -31.31 |
| INA – INGENIA COMMUNITIES GROUP | 32.24 | VUL – VULCAN ENERGY RESOURCES LIMITED | -31.04 |
| MP1 – MEGAPORT LIMITED | 24.85 | DYL – DEEP YELLOW LIMITED | -28.66 |
| 4DX – 4DMEDICAL LIMITED | 24.27 | PLS – PLS GROUP LIMITED | -28.52 |
ASX300 Best and Worst Performers of the month (in %)
| Company | Change | Company | Change |
|---|---|---|---|
| CDA – CODAN LIMITED | 41.02 | EIQ – ECHOIQ LIMITED | -57.60 |
| BNZ – BENZ MINING CORP. | 39.43 | LIN – LINDIAN RESOURCES LIMITED | -36.60 |
| SRL – SUNRISE ENERGY METALS LIMITED | 33.96 | BC8 – BLACK CAT SYNDICATE LIMITED | -32.09 |
| MGH – MAAS GROUP HOLDINGS LIMITED | 33.77 | ELV – ELEVRA LITHIUM LIMITED | -31.52 |
| INA – INGENIA COMMUNITIES GROUP | 32.24 | XRO – XERO LIMITED | -31.31 |
ALL-TECH Best and Worst Performers of the month (in %)
| Company | Change | Company | Change |
|---|---|---|---|
| CDA – CODAN LIMITED | 41.02 | EIQ – ECHOIQ LIMITED | -57.60 |
| MP1 – MEGAPORT LIMITED | 24.85 | XRO – XERO LIMITED | -31.31 |
| 4DX – 4DMEDICAL LIMITED | 24.27 | AI1 – ADISYN LIMITED | -30.00 |
| CCL – CUSCAL LIMITED | 11.41 | OFX – OFX GROUP LIMITED | -25.90 |
| CGS – COGSTATE LIMITED | 10.71 | GTK – GENTRACK GROUP LIMITED | -23.60 |
All index data are ex dividends. Commodities are in USD.
Australia & NZ
| Index | 30 Sep 2026 | Month Of Sep | Quarter To Date (Jul-Sep) | Year To Date (2026) |
|---|---|---|---|---|
| NZ50 | 13834.390 | -0.60% | 1.56% | 2.11% |
| All Ordinaries | 8969.20 | -3.26% | -0.19% | -0.59% |
| S&P ASX 200 | 8789.30 | -3.16% | 0.12% | 0.86% |
| S&P ASX 300 | 8718.90 | -3.17% | 0.05% | 0.42% |
| Communication Services | 1538.10 | -3.51% | -5.24% | -11.64% |
| Consumer Discretionary | 3557.60 | -3.91% | -10.96% | -10.90% |
| Consumer Staples | 13106.40 | -2.17% | -1.76% | 12.81% |
| Energy | 10886.90 | -1.17% | 14.75% | 30.14% |
| Financials | 9188.80 | -1.08% | -1.72% | -1.58% |
| Health Care | 32711.20 | 3.44% | 25.60% | -3.19% |
| Industrials | 8038.20 | -1.84% | -4.98% | -4.60% |
| Info Technology | 1678.90 | -10.76% | -7.81% | -22.06% |
| Materials | 24094.60 | -7.25% | 3.02% | 14.07% |
| Real Estate | 3313.30 | -2.03% | -9.29% | -16.46% |
| Utilities | 9813.30 | -4.34% | 1.38% | 1.61% |
| A-REITs | 1544.00 | -1.89% | -8.95% | -15.43% |
| All Technology Index | 2792.70 | -9.08% | -7.85% | -17.78% |
| Banks | 3847.10 | -1.34% | -1.62% | -5.44% |
| Gold Index | 18713.10 | -4.18% | 24.69% | 0.21% |
| Metals & Mining | 8306.80 | -7.41% | 3.44% | 14.31% |
The World
| Index | 30 Sep 2026 | Month Of Sep | Quarter To Date (Jul-Sep) | Year To Date (2026) |
|---|---|---|---|---|
| FTSE100 | 10606.00 | -2.02% | 1.04% | 6.69% |
| DAX30 | 25199.19 | -4.03% | 0.81% | 2.89% |
| Hang Seng | 24613.27 | -3.73% | 7.57% | -4.80% |
| Nikkei 225 | 66753.72 | 0.67% | -4.72% | 32.61% |
| NZ50 | 13834.390 | -0.60% | 1.56% | 2.11% |
| DJIA | 50906.05 | -4.29% | -2.70% | 5.25% |
| S&P500 | 7651.54 | -0.45% | 2.03% | 10.95% |
| Nasdaq Comp | 26861.06 | 1.86% | 2.47% | 14.70% |
Metals & Minerals
| Index | 30 Sep 2026 | Month Of Sep | Quarter To Date (Jul-Sep) | Year To Date (2026) |
|---|---|---|---|---|
| Gold (oz) | 4182.01 | -6.11% | 3.75% | -4.66% |
| Silver (oz) | 61.46 | -7.09% | 4.60% | -21.12% |
| Copper (lb) | 6.6000 | 0.92% | 6.92% | 16.16% |
| Aluminium (lb) | 1.4739 | 0.82% | 4.80% | 10.20% |
| Nickel (lb) | 7.1960 | -5.88% | -3.62% | -3.89% |
| Zinc (lb) | 1.7954 | -2.77% | 13.49% | 28.83% |
| Uranium (lb) weekly | 89.75 | 0.62% | 5.59% | 9.45% |
| Iron Ore (t) | 96.73 | 0.93% | -3.52% | -9.71% |
Energy
| Index | 30 Sep 2026 | Month Of Sep | Quarter To Date (Jul-Sep) | Year To Date (2026) |
|---|---|---|---|---|
| West Texas Crude | 88.92 | 6.57% | 26.27% | 54.86% |
| Brent Crude | 102.51 | 16.11% | 39.53% | 68.46% |
