Equity market trends: a moment of weakness for growth stocks
September was a negative month for most of the equities markets. This evolution constituted a change from previous months, particularly for American investors, as the American stock markets had closed positive (in USD) for five months in a row. Growth stocks (and predominantly technology) drove the American equity markets to record highs since the low in March but pushed the broad S&P500 down in September. The famous top 5 (Facebook, Apple, Amazon, Microsoft, Alphabet/Google) lost, on average, 15% between the highest and lowest point of the month. There was no specific reason for this evolution. Still, the valuations of those equities became relatively high in the meantime, and during the past months, capital flows into these values were high.
European equities were somewhat weaker as well but continued to fluctuate around the level of the past few months. However, Europe seems to become the new hotspot of the corona pandemic with higher infection rates in various countries, mainly France, Spain, and the United Kingdom. These infection rates revive fears of a more considerable impact on economic activity. Nevertheless, there was more positive news about developing a corona vaccine (Pfizer expects to have a vaccine potentially by the end of this year). But investor sentiment wavered somewhat due to the American Congress, which couldn't agree on extending the support measures. Some regarded the recent meeting of the Federal Reserve as a disappointment. The presidential elections in the US also contributed to investor uncertainty.