Investment market update September 2026

13 October 2026

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5 min read

Bill Watson

Chief Investment Officer

Bill Watson, BUSSQ's Chief Investment Officer, provides an overview of investment market performance for the first quarter of 2026/27.

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Hi. I’m Bill Watson, and I’m the Chief Investment Officer here at BUSSQ.

Welcome to our quarterly market update and the drivers behind what happened in investment markets during the last three months.

So, let’s get into it. The first three months of the financial year were slightly positive for most of our asset classes. However, Bonds and fixed interest didn’t perform well, mainly because of bond yields increasing globally.

Particularly, in Australia, we are seeing the effects of inflation and higher interest rates on consumer confidence, which is currently at one of the lowest levels seen in quite some time. The main concerns among consumers are still the cost of living and high interest rates. This has a run on effect to the Australian share market which fell during the month of September, after some positive gains in July and August.

US Share Markets have continued to see stronger returns, mainly driven by technology stocks. These large tech companies are really what’s propping up the U.S. market growth. Other listed companies are not seeing stock price increases, continuing the trend of the last few years.

Globally, developed share markets continued to show pressure from oil prices, inflation and rising interest rates with the likelihood - globally and in Australia - of further increases to interest rates.

Emerging markets continue to be volatile. September performed well but, overall for the quarter, returns were down.

Looking ahead, AI-related companies and AI infrastructure looks likely to continue to drive share market returns, mainly for US markets.

We expect that higher oil prices and global uncertainty may keep inflation and interest rates higher for longer, continuing to affect consumer confidence.

It’s important to remember that superannuation is generally a long-term investment. Short-term ups and downs are a normal part of investing. What happens with your investment over 10, 20, 30 years or longer is what’s most important to focus on.

That’s why myself and the investment team continue to prioritise building a diversified investment portfolio that’s designed to manage short and long-term risk which, over time, can help you to achieve your long-term retirement goals.

Thanks for listening today. If you’d like even more detail on markets and performance, there’s a Market Update article available on our website.

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What's been happening in investment markets?

The first three months of this financial year were, for most asset classes, slightly positive. However, bonds and fixed income continued their poor run punished by global yields going higher again¹.

In the Australian market, September took back July and August gains. The ASX 300 lost 2.43% in September, returning 1.26% for the quarter². The Reserve Bank increasing the official cash rate to 4.60%, in response to persistent inflation and the likelihood of further interest rate hikes, reduced investor confidence³.

Inflation and high interest rates have sapped Australian consumer confidence with the Westpac-Melbourne Consumer Sentiment Index falling 4.7% to 80.4 in October, the worst figure since this survey began⁴. With lower consumer confidence, the outlook for the Australian share market remains less positive than that of global share markets.

In developed share markets there was a more positive result in September, with the MSCI ACWI World ex Australia Index (AUD) returning 1.85% for the month and 1.45% for the quarter. Returns for the quarter were significantly lower than the 12.61% for the last quarter of 2025/26⁵.

In the US stock market, technology stocks yet again drove returns, but over 300 companies in the S&P 500 fell in price. This continued the trend of the last few years⁶.

Like Australia, developed markets continued to be worried about inflation, rising interest rates and oil. The quarter saw the US Federal Reserve raising rates by 0.25% to 4.0% in September, the first time in over 3 years⁷. Like Australia, there is the prospect of further increases.

In Europe the European Central Bank also increased interest rates, to 2.50% in September⁸.

Emerging markets also performed well in September, but not well enough to recover from a poor July and August, returning -0.79% for the quarter⁹.

Bonds had a challenging period as interest rates stayed high and governments continued borrowing heavily. As a result, bond yields rose to levels not seen since before the Global Financial Crisis¹⁰.

Other asset classes including infrastructure, property, credit and opportunistic growth performed in line with our expectations. These asset classes can help diversify a portfolio and may help reduce the impact of market volatility over time.

Looking ahead

The ongoing investment in AI technology and AI infrastructure looks likely to continue to drive share market returns and private credit. Even if the war in the Middle East ends soon, which may be unlikely, oil price inflation will continue into the near term harming consumer confidence and keeping interest rates high. Even though government bond yields are at decades high, they still have a lot more to go to reach the highs we saw in the early to mid 90s¹⁰.

Markets can still be affected by things like inflation, interest rates, world events and economic growth. These factors can cause short term ups and downs, but they are a normal part of investing. For most members, super is a long term investment. That's why BUSSQ continues to focus on building a diversified investment portfolio designed to help members achieve their long term retirement objectives.

BUSSQ is here for you

If you'd like to understand more about your investment options, review your investment mix or discuss your retirement goals, contact us on 1800 692 877 to speak with our team.