A casual observer of financial markets might have expected worse after August. Much worse. If you’ve been keeping up with the media reports, red ink looked like a sure thing for September.
In fact, the exact opposite graced September as all the major asset classes ran higher last month. One might reasonably be surprised at the outcome. After all, the Federal Reserve cut interest rates by an aggressive 50 basis points two weeks back, a decision in anticipation that the subprime/housing fallout would take a hefty toll on the economy and, by extension, the capital markets. Trouble may yet be coming, but as you can see from our chart below, everything was in the black for September.
If you weren’t reading the day-by-day analysis and instead looked only at monthly total returns, you might think that all’s well and by more than a little.
All was particularly well last month in emerging market equities, which was firmly in first place for September’s biggest gain. Indeed, EEM surged nearly 12% last month. Emerging market stocks have rarely performed better on a calendar month basis in dollar terms.
Commodities had an impressive month as well. DJP added 8% in September, driven by higher prices for oil and gold, to name but two of the more obvious climbers. In third place: EFA, a proxy for developed market stocks.