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September is typically a weaker month for the stock market—and this year is no exception. So far this month, global stock markets have shown little momentum. However, this is not solely due to seasonal factors, but rather to a series of closely interlinked negative factors.
The conflict with Iran has escalated once again and has now spread to the Bab al-Mandab Strait. As a result, a key alternative route for global energy transport is coming under increasing pressure. As a result, the price of crude oil has risen significantly, and refined energy products such as diesel and gasoline are now more expensive than ever before. While this provides additional returns for commodity investors and broadly diversified multi-asset portfolios, it simultaneously weighs on both the stock and bond markets.
The inflationary pressure resulting from higher energy prices is driving already high bond yields even higher. U.S. Treasury bonds, which are a global benchmark, are particularly affected. This ultimately makes U.S. dollar liquidity more expensive—essentially the “lubricant” of global financial markets. At the same time, persistently high inflation has recently prompted several central banks to raise their key interest rates, which has also caused short-term market interest rates to rise.
In addition, many suppliers to the AI industry have recently come under pressure—and, at times, the AI boom as a whole has been affected as well. Calls for a slower pace of development for particularly powerful models, stricter safety standards, and stronger regulation have weighed on the sector. Nevertheless, there have been no major market corrections so far. This remarkable resilience is supported above all by the continued robust macroeconomic environment and stable earnings prospects. Furthermore, there are strong indications that the bond markets are oversold or that the recent rise in yields has been too rapid and too extreme. In the short to medium term, therefore, a reversal in bond yields appears increasingly likely. Investors should not assume that interest rate pressure will continue at the same pace.
A nuanced perspective is also warranted in the debate over AI safety. It remains to be seen how seriously leading AI developers actually mean their calls for stronger regulation—and to what extent strategic interests are at play: Stricter regulatory requirements would raise the barriers to entry for new competitors and could thus further solidify the market position of the two (!) already established providers, Anthropic and OpenAI. At the same time, it cannot be ruled out that they are also emphasizing the risks and extraordinary capabilities of high-performance models for marketing purposes—not least to underscore their technological leadership and thereby justify their high valuations in the run-up to potential IPOs.
