Equities extended their losses into September, with investors continuing to question the pace of global growth as the Chinese economy continued showing signs of weakness. Developed market equities were not immune, losing 2-5%, while emerging market equities lost 3%. In the U.S., consumer discretionary and utility stocks were the only sectors to generate positive results, while energy and materials continued to lag. WTI crude oil closed down 8% for the month but remains in the $40 range that it has traded in for the last few months. Treasury yields fell on news that the Fed would keep interest rates unchanged and, thus, supported bond markets and provided a safe haven from risk assets.
- The Federal Reserve voted 9-1 to leave the Fed Funds target rate unchanged at 0-0.25%; the Fed cited sub-2% inflation and the potential for further declines given global economic uncertainty
- A sell-off in biotech shares caused the healthcare sector to underperform following the Hillary Clinton campaign's pronouncement that pricing in the specialty drug market is "outrageous" and in need of government regulation
- The Chinese central bank (PBOC) confirmed that the yuan is not in need of long-term devaluation, affirming that recent action was part of its plan to gradually decouple the currency from the U.S dollar.