Volatility persists in the FX and US equities markets during September – Month in Review: September 2023
Macroeconomic Environment Review
The FX and US equities markets were both volatile in September. In particular, the US dollar strengthened against most major currencies in September, with the exception of the Japanese yen. The US Dollar Index, which measures the value of the Dollar against a basket of six major currencies, rose by 1.5% over the month. The USD’s strength was driven by a number of factors, including: a) the rising US interest rates as the Federal Reserve raised interest rates by 0.75 percentage points in September, the fifth increase so far this year, which made US assets more attractive to investors, as they offered higher yields, b) the strong US economic data, as the US economy added 263,000 jobs in September, which was above expectations. The unemployment rate remained unchanged at 3.7% and this strong economic data reinforced the view that the Fed will continue to raise interest rates aggressively in the coming months, and c) the persisting global economic uncertainty, as the global economy is facing a number of challenges, including the ongoing war in Ukraine and rising inflation. This uncertainty has led investors to seek safety in the Dollar, which is seen as a safe-haven currency.
With regards to the US equities markets, they declined in September, with the S&P 500 index falling by 4.87%. The Dow Jones Industrial Average fell by 3.50%, and the Nasdaq Composite index fell by 6.31%. The decline in US equities was fueled primarily by the rising interest rates, as the Fed’s aggressive interest rate hikes raised concerns about a potential recession. Of course, at the same time higher interest rates also make it more expensive for companies to borrow money, which can weigh on profits. Furthermore, the strong US dollar also hurt the earnings of US companies that generate a significant portion of their revenue overseas. And finally, as mentioned above, the ongoing global economic uncertainty that supported the USD also weighed on US equities. Investors were concerned about a potential slowdown in the global economy and the impact of rising inflation on corporate profits. Despite the decline in September, US equities markets are still up over the year. The S&P 500 index is up by 11.68% year-to-date, the Dow Jones Industrial Average is up by 1.09%, and the Nasdaq Composite index is up by 27.43%.
Monthly Performance Review
During the month of September 2023, AENAON Syncro Strategies generated the following total returns net of fees:
Across the spectrum of our benchmark indices, our strategies’ performance during September was rather positive. As a comparison, the US S&P 500 equities index dropped by 4.87%, the Barclay Hedge Fund Index posted a 1.57% decline, the Barclay CTA Index added 1.00% while the other benchmark indices can be seen on the chart below.
Chart 1: Monthly Performance vs. Benchmark Indices – September 2023
Further to the above, and as we were notified during the past month, AENAON’s strategies received yet another award from the prestigious BarclayHedge community: AENAON Syncro Equities, our quantitative US Equities model, has ranked number 8 in the Equity Market Neutral category, among hundreds of our peers, underlining our robust performance over the past years that continues strong.
Charts 2, 3 and 4: Inception-to-Date Performance vs. Benchmark Indices
You can always review our updated factsheets at the following Fundpeak links, with monthly performance updates and statistics since inception:
