Weak September does not spell the end for the equity rally – UBS

In September, global equities experienced their first decline in seven months and their largest fall since March 2020. But economists at UBS expect the equity rally to resume as the market focus returns to solid fundamentals, including strong earnings growth.

Sentiment was undermined by worries over global growth and more hawkish signals from the Fed

“Equity market sentiment was hurt by a combination of worries over growth, central bank policy, fast-rising yields, and the US fiscal impasse. But we believe that such concerns over overdone, and we expect the rally to resume.”

“The quarter was marked by rising confidence about progress toward economic normalization, along with belief that inflation pressures will prove transitory. We think this positive sentiment will return as recent headwinds abate and the focus shifts back to the outlook for solid economic growth and strong earnings.”