News & Analysis

Global equities and risk currencies slide in September

6 October 2021 By Lachlan Meakin


September saw a major shift to risk off, with global equity markets having their worst month of 2021. Risk sentiment linked currencies and cryptos also performed poorly as the traditional seasonal weakness of September, increasingly hawkish central banks and other macro issues weighed on investor sentiment.

Global Equities

September lived up to its historical seasonal weakness with a steep drop in equities seen across all regions.  Third quarter gains were wiped as US benchmark stock indices saw some of the worst monthly performances since March 2020.

Source: Bloomberg

Macro issues and an increasingly hawkish Federal reserve saw global equities take a hit in September. The Evergrande unwinding in China and continuing supply and energy issues gave investors pause to consider whether the global economic recovery had peaked. This, along with a Fed that is all but certain to announce tapering in November, saw stocks and other risk assets drop sharply.

FX Markets

September saw the US dollar surge on the back of a flight to safety, rising US bond yields and an indication from the Federal Reserve that a winding back of its accommodative policies would begin by the end of the year. A big rally in oil prices saw the Norwegian Krone and Canadian dollar somewhat insulated, while the risk sensitive NZD saw its worst month of Q3, dropping over 2% in September.

Source: Bloomberg


The Aussie dollar saw a rise at the start of September on a better than expected GDP figure, raising hopes that the downturn due to ongoing lockdowns may not be as deep as first feared. A dovish RBA policy statement a week later however saw the AUDUSD decline to head towards testing its 0.71 USD support level and a Commitment of Traders (COT) report showing the biggest speculative net short position in AUD since the futures started trading.

Source :

Such an extreme short position could be seen as a bullish contrarian signal. We did see a bounce in AUD in the latter part of September, as plans for reopening the economy solidify and the growing belief of investors we may have seen the “peak” of RBA dovishness as a result.




Brent as US crude strongly rallied during September, breaking through its July highs as OPEC+ confirmed it would stick to its current modest output increase policy, despite demand for petroleum products exceeding expectation.

The oil price has also benefitted from a marked increase in gas prices prompting a switch to fuel oil and other crude products for energy needs.

With three-quarters of global energy demand still being met by fossil fuels, the overall sentiment for oil in the near term looks bullish.

Source: Bloomberg


Despite the broader commodity market surging, gold dropped over 3% in September after being rejected early in the month at the 1830 resistance level set back in July.

Gold did find support late in the month at the 1720 support level, as a resurgent US dollar overcame gold’s attractiveness as an inflation hedge and safe haven asset, pointing to possible further weakness.

Source: GO MT4

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