In September oil and gas prices soared, supply chain problems worsened, the Federal Reserve announced tapering and China's real estate company Evergrande spooked the markets.

After dropping 7,37% to 68,5 dollars per barrel in August, oil gained 9,53% in September to close at 75,03 dollars per barrel. Hurricane Ida cut about 80% of the Mexican Gulf's offshore oil and gas production for more than a week and damaged platforms. The climb persisted throughout the month as global output disruptions have forced energy companies to pull large amounts of crude out of inventories. At the same time OPEC+, has struggled to raise output due to maintenance delays during the pandemic.

Meanwhile natural gas prices soared from 4377 to 5731 or 31% despite Russia assuring it will remain a reliable supplier to global markets. 

But supply problems are not only limited to the energy sector. Among other sectors, a shortage of chips is having an impact also, particularly on car manufacturers whose revenues are predicted to be heavily impacted as production is slowing down due to chip supply shortages. Continued supply issues combined with higher raw material costs also keeps inflation high and concern grows that it may not simply be a temporary inflation spike as the global economy reopens post-COVID. 

While the Federal Reserve previously hinted at slowing down its bond-buying program which currently stands at USD 120 Billion per month, the FED now confirmed they will start doing so as soon as November. As a result the dollar gained 1,92% against the Euro to close at 1,1581, the highest level since July 2020.

Last but not least, Chinese real-estate giant is on the verge of bankruptcy as it failed to pay interests on its USD 300 Billion of outstanding debt, triggering fears of a spill-over into the real estate markets and international lenders. The Hong Kong Hang Seng Index closed the month with a 5,04% loss. 

With all this news, it's no surprise global markets ended in the red in September. The S&P500 dropped 4,76%, its first monthly decline since January and the strongest September decline since 2010. The Dow Jones dropped 4,29% and Nasdaq Composite 5,31%. Also European indices closed the month in red. The Eurostoxx 50 dropped 3,53%, the German DAX 3,63% and the French CAC40 2,40%. The Slovenian SBITOP index booked a 2,14% loss. The British FTSE lost a modest 0,47% while the Pound Sterling lost 0,14% against the Euro to 0,8594.

The Japanese Nikkei index on the other hand continued to perform strongly with a 4,85% gain. A quarterly survey by the Bank of Japan found business sentiment among Japanese manufacturers has risen to its highest level in nearly three years.

Rudy Marchant
Fund manager Primorski skladi, d.o.o., Koper

Monthly reports - September 2021