Investment market update: October 2023

September brought Q3 to a close with a disappointing performance on the stock markets. Discover what happened and how it could affect your portfolio.

5 min read

Global stock market returns were broadly disappointing in September. While inflation continued to cool for most economies and central banks held steady on interest rates, economic uncertainty is likely to continue for the foreseeable future. Learn more about what happened on the global markets and what it could mean for your investments.

Whilst this article focuses in the main on September 2023 market news, there are references to events and market performance from previous months.


Underlying inflation cooled further in August, according to reports released in September. For the first time in two years, inflation excluding food and energy was below 4%1.
While this is good news for the Federal Reserve, there are still some factors to be cautious about. The Commerce Department reported that, broadly speaking, prices remained elevated, and this was particularly true for fuel1.

The Fed chose to pause its interest rate hikes in September, holding rates within the range of 5.25 – 5.5%2. It suggested that there may be one further rise before the end of the year, and that it would likely cut rates more slowly than previously suggested in 20242.

September was a disappointing month for the US stock market, ending a tough quarter3.


September returns

Q3 returns

S&P 500



Dow Jones Industrial Average



Nasdaq Composite



Source: Reuters


The Consumer Prices Index rose by 6.7% in the 12 months to August 2023, a drop of 0.1% from July attributed to a fall in food and hotel accommodation prices4 This was unexpected; economists had predicted a small rise in inflation for the month because of the increase to fuel prices5.

The inflationary drop led the Bank of England (BoE) to pause its campaign of interest rate rises at its September meeting, ending a run of 14 consecutive rate rises since December 20216. The Bank stated that it will continue to monitor inflationary and economic data, including wage growth and the labour market, to determine whether further rate rises will be necessary7.

The FTSE 100 was the strongest performing equity market in Europe throughout Q3, returning 1.9%8. This is thought to be due to its exposure to the energy sector, which was supported by large price rises for oil8.


Annual inflation in the eurozone fell to 4.3% in September, down from 5.2% in August9. Interest rates in the bloc are at a record high of 4%, and the European Central Bank (ECB) has suggested that rates may now be sufficiently high to bring inflation down to target levels9. It expects to maintain the current rate for the foreseeable future9.

Economists expect that the eurozone economy will have experienced a contraction in Q3 as a result of the ECB’s high interest rates10. Germany and France, in particular, seem to be suffering as a result of weakening consumer demand10.

The economic pain that the eurozone is experiencing seemed to be reflected on the stock market. The pan-European Stoxx 600 was down 2.1% for September and has dropped 2.9% for the quarter11.


Japan was one of the best-performing major equity markets in local currency terms over the course of Q3; the TOPIX returned 2.5% for the quarter and also has a strong year-to-date return of 25.7%10.

Yen weakness was a concern. It hit an 11-month low against the dollar in September, as the Bank of Japan seemed more intent on sustaining a rate of 2% inflation than boosting the currency’s value12.

In China, reports suggested that economic activity including retail sales and industrial output had improved in August, a sign that recent slowdowns may be stabilising13. Indicators suggest that the difficulties facing the housing market in China could continue to weigh on economic growth13.

The MSCI Asia ex-Japan fell by 3.2% in Q3, bringing its year-to-date returns to -0.1%10.

What this means for you

September was a relatively disappointing month on the global stock markets. Headlines about sticky inflation and persistent high interest rates can be hard to ignore, making it tempting to check the value of your investments frequently to see whether they’ve been affected.

It’s important to remember that no matter what’s happening in the wider economy, it’s your own personal goals that are the most significant factor for your investment strategy. Fluctuations in value are part and parcel of investing in the stock market; the long-term outlook for your portfolio is far more important.

So, try to tune out the noise and avoid focusing on the negatives of the current economic data. Instead, let your portfolio ride out the peaks and troughs, knowing that your planner has helped you to balance your investments to give the greatest chance of hitting your goals when you need to.

Please note: This guide is for general information only and does not constitute advice. The information is aimed at retail clients only.

The content of this guide was accurate at the time of writing. While information is considered to be true and correct at the date of publication, changes in circumstances, regulation, and legislation after the time of publication may affect the accuracy of the guide.


1. 29.09.2023 US inflation outlook brightens as underlying price pressures subside Reuters
2. 20.09.2023 Fed declines to hike, but points to rates staying higher for longer CNBC
3. 30.09.2023 S&P 500 dips after US inflation data, ending weak third quarter Reuters
4. 20.09.2023 Consumer price inflation, UK: August 2023 Office for National Statistics
5. 20.09.2023 UK inflation: Slowing food prices drive surprise fall BBC
6. 21.09.2023 Bank of England’s interest rate pause raises hopes peak has been reached Guardian
7. 21.09.2023 Bank rate maintained at 5.25% - September 2023 Bank of England
8. 02.10.2023 Quarterly Market Review J. P. Morgan
9. 29.09.2023 Euro zone inflation fell to 4.3% in September, lowest level since October 2021 CNBC
10. 22.09.2023 Euro zone economy likely contracted this quarter Reuters
11. 30.09.2023 European stocks log worst quarter in a year with a drop of 2.9% CNBC
12. 25.09.2023 Yen hits 11-month low against dollar, watched for intervention risk Reuters
13. 15.09.2023 China’s economy shows signs of improvement but real estate is still a weak spot CNN