Investment markets in review – Q3 2026
Pitcher Partners Investment Services (Melbourne) | The information in this article is current as at September 30, 2026.
Financial markets experienced a volatile third quarter of 2026, with sentiment heavily influenced by developments in the Middle East. Markets swung between hopes of a US-Iran peace agreement and renewed concerns over an escalation in hostilities, with the prospect of a sustained de-escalation becoming increasingly uncertain. These developments reverberated across global markets, with energy prices, persistent fiscal deficits and substantial investment in AI infrastructure contributing to renewed concerns around inflation and the outlook for monetary policy.
Major central banks responded to persistent inflationary pressures against a backdrop of heightened geopolitical tensions and ongoing supply-side constraints. The US Federal Reserve unanimously raised the federal funds rate to 3.75-4.00% at its September meeting, its first rate increase since 2023. Markets are now pricing in at least three further rate hikes over the next 12 months. In Australia, the RBA raised the cash rate to a 15-year high of 4.60% in response to persistent inflationary pressures. Higher borrowing costs continued to weigh on economic activity, while cost-of-living pressures remained elevated. The path of future rate decisions is likely to remain data dependent, particularly with respect to inflation and labour-market conditions.
Geopolitical tensions and higher bond yields also weighed on risk sentiment, although equity markets proved relatively resilient overall. The ASX 200 was broadly unchanged over the quarter, supported by a better-than-expected August reporting season, with resilient margins and disciplined cost management helping to offset a softer earnings backdrop. Globally, growing scrutiny of elevated AI-related spending and technology valuations contributed to a period of weakness across the technology sector. US equities subsequently recovered as stronger-than-expected earnings from major technology companies, including Alphabet and Amazon, helped restore investor confidence, with the S&P 500 returning 2.0% over the quarter. Elsewhere, the Nikkei 225 declined 4.7% amid weakness in global technology stocks, while France’s CAC 40 fell 5.2%, reflecting fiscal concerns and the index’s significant exposure to the luxury goods sector.
Ongoing geopolitical tensions lifted Brent crude oil towards US$100 per barrel, highlighting the prospect of higher energy prices for longer. Gold rose 4.0% over the quarter, demonstrating resilience despite the headwind of higher real yields.
Bitcoin had a standout quarter despite heightened economic uncertainty, supported by strong ETF inflows that fuelled a remarkable rebound in the cryptocurrency. Bitcoin rose 42% from its yearly low to nearly US$83,000. The Australian dollar closed the quarter broadly flat at US$0.69.
| Financial Markets at 30 September 2026 | |||
| Indices | Current Level | 3 Months | 1 Year |
| ASX 200 | 8,789.3 | 0.1% | -0.67% |
| ASX 200 (Acc) | 122,136.5 | 1.3% | 2.68% |
| US S&P 500 | 7,651.5 | 2.0% | 14.40% |
| Japan Nikkei | 66,753.7 | -4.7% | 48.56% |
| UK FTSE 100 | 10,606.0 | 1.0% | 13.43% |
| MSCI World (AUD) | 25,556.5 | 1.5% | 9.78% |
| German Dax | 25,199.2 | 0.8% | 5.52% |
| French CAC | 7,964.5 | -5.2% | 0.87% |
| HK Hang Seng | 24,613.3 | 7.6% | -8.35% |
| Shanghai Comp | 3,842.2 | -6.2% | -1.05% |
| ASX 200 Prop (Acc) | 73,371.2 | -8.4% | -14.34% |
| Global Prop | 3,068.9 | -6.1% | 2.90% |
| Australia 2Y Bond Yield | 4.95 | +53 bp | +146 bp |
| Australia 10Y Bond Yield | 5.35 | +63 bp | +105 bp |
| US 2Y Bond Yield | 4.89 | +71 bp | +128 bp |
| US 10Y Bond Yield | 5.28 | +82 bp | +113 bp |
| Commodities | Current Level | 3 Months | 1 Year |
| Gold (oz) | 4,167.4 | 4.0% | 7.99% |
| Oil (Barrel) | 90.4 | 30.1% | 44.97% |
| Iron Ore (Tonne) | 89.6 | -4.1% | -8.75% |
| Aluminium | 3,169.5 | 2.7% | 15.11% |
| Copper | 14,410.0 | 7.7% | 30.25% |
| Lead | 1,873.5 | -0.1% | -5.71% |
| CRB Index | 590.2 | 15.4% | 12.65% |
| Currencies | Current Level | 3 Months | 1 Year |
| AUD/USD | 0.6943 | 0.3% | 5.02% |
| AUD/EUR | 0.6127 | 1.1% | 8.75% |
| AUD/GBP | 0.5232 | 0.3% | 6.45% |
| AUD/JPY | 109.28 | -2.8% | 11.76% |
| AUD/CNY | 4.655 | -0.8% | -1.09% |
| ASX Indices | Current Level | 3 Months | 1 Year |
| S&P/ASX Small Ordinaries Index | 3,368.62 | -1.6% | -9.28% |
| S&P/ASX 200 Communication | 1,538.09 | -5.2% | -17.37% |
| S&P/ASX 200 Consumer Discretionary | 3,557.65 | -11.0% | -21.26% |
| S&P/ASX 200 Consumer Staples | 13,106.41 | -1.8% | 11.60% |
| S&P/ASX 200 Energy | 10,886.90 | 14.7% | 30.65% |
| S&P/ASX 200 Financials | 9,188.77 | -1.7% | -4.03% |
| S&P/ASX 200 Financial excluding A-REIT | 10,248.57 | -1.7% | -4.03% |
| S&P/ASX 200 Healthcare | 32,711.22 | 25.6% | -12.58% |
| S&P/ASX 200 Industrials | 8,038.18 | -5.0% | -5.10% |
| S&P/ASX 200 Information Technology | 1,678.92 | -7.8% | -42.65% |
| S&P/ASX 200 Materials | 24,094.65 | 3.0% | 28.06% |
| S&P/ASX 200 A-REIT | 1,543.97 | -8.9% | -17.13% |
| S&P/ASX 200 Utilities | 9,813.28 | 1.4% | -1.97% |
| World Indices | Current Level | 3 Months | 1 Year |
| MSCI World Value Index | 4,914.68 | 3.4% | 16.40% |
| MSCI World Growth Index | 7,520.30 | -0.2% | 11.18% |
| MSCI World Small Cap Index | 736.34 | -4.1% | 13.79% |
| MSCI World Large Cap Index | 3,172.35 | 2.3% | 14.86% |
| MSCI World Communication Services | 171.48 | 3.5% | 7.64% |
| MSCI World Consumer Discretionary | 464.23 | -4.4% | -7.06% |
| MSCI World Consumer Staples | 301.62 | -3.1% | 2.31% |
| MSCI World Energy Sector | 358.18 | 14.5% | 35.67% |
| MSCI World Financials | 240.48 | 1.4% | 8.67% |
| MSCI World Health Care | 415.52 | 3.0% | 14.78% |
| MSCI World Industrials | 537.23 | -5.9% | 8.95% |
| MSCI World Information Technology | 1,253.59 | 6.1% | 30.40% |
| MSCI World Materials Sector | 432.56 | 0.6% | 14.55% |
| MSCI World Utilities Sector | 192.74 | -10.1% | -1.53% |
Source: Morningstar, IRESS
