September 2026

September was dominated by geopolitics. Trump and Xi put trade and tariffs back in focus, tensions around Iran continued and oil moved sharply higher, with Brent up 11.3% over the month. Equities were mixed rather than uniformly weak. The S&P 500 slipped 0.5%, the Nasdaq rose 1.9%, while the Dax fell 4.0% and Chinese equities 5.6%. Gold fell 8.0%, silver almost 20%, while Bitcoin gained 6.9%.

The Trump-Xi summit was the month’s political centrepiece. After months of tariffs, threats and manoeuvring, the meeting lowered the temperature without resolving the argument. The existing trade truce was extended and the two sides subsequently agreed a $60 billion low-tariff framework for selected goods. The bigger disagreements remained, not least China’s rare-earth exports. Trump spent much of 2026 demonstrating how tariffs could be used as leverage. Xi arrived in Washington with leverage of his own.

That matters beyond the politics. Rare earths sit inside the supply chains for technology, defence and advanced manufacturing, while tariffs carry their own consequences for prices and trade. September offered a glimpse of a US-China relationship in which both sides can impose economic costs on the other. The summit bought time. It did not settle the contest.

The Middle East presented a more immediate problem. Seven months into the conflict, Washington and Tehran increasingly resemble a Mexican stand-off. The US can continue squeezing Iran economically and militarily, while Tehran retains the ability to make that pressure expensive for everybody else through disruption to energy supplies. Neither side appears ready to concede.

Who blinks first? Iran is paying a considerable price, but Washington has a problem of its own. The longer the stand-off continues, the longer expensive energy feeds into the global economy. Brent ended September at $103.53, up 11.3%, while WTI rose 3.7% to $90.55. This is no longer simply a brief geopolitical premium. The energy shock has lasted.

Timing now matters. The Northern Hemisphere is heading towards winter with oil above $100 and no clear resolution in the Middle East. Higher crude and refined-product prices raise transport and manufacturing costs and eventually find their way towards households. Gas matters too. By mid-September, the Bank of England noted that Brent had risen 36% since its July report period and UK wholesale gas 78%. It also warned that normalisation of energy supply was likely to be slow even if the conflict were resolved.

That is becoming a central-bank problem. The Fed raised rates by 25 basis points in September, taking its target range to 3.75–4.00%. More interesting was the backdrop. Economic activity was still expanding at a solid pace, domestic spending remained resilient and capital investment was robust. The US economy was not forcing the Fed’s hand through weakness. Inflation was.

The Bank of England held at 3.75%, but three of its nine policymakers wanted an increase to 4%. Higher energy prices were already affecting inflation across major economies, while the indirect effects through supply chains were expected to build over the coming quarters. UK inflation was projected to move above 4% in early 2027 if prevailing energy prices persisted.

If oil stays around $100 through the winter, how much room do policymakers really have? Higher rates cannot produce another barrel of oil or reopen a shipping route. They can restrain the second-round inflationary effects, but only by putting more pressure on households and businesses already paying more for energy.

Bond markets have been adjusting to precisely that problem. Yields rose as investors confronted persistent inflation, resilient economic activity and less scope for monetary easing. Higher yields spread the pressure well beyond oil. Mortgages, corporate borrowing, government financing and equity valuations all eventually feel the effect. In Britain, two-year fixed mortgage rates were already around 95 basis points higher than before the Middle East conflict began.

And yet US equities hardly blinked. The S&P 500 finished September down just 0.5% and the Nasdaq gained 1.9%. There was still enough confidence in technology earnings, artificial intelligence investment and the broader US economy to offset much of the discomfort coming from oil and rates.

Elsewhere, investors were less forgiving. The Dax fell 4.0%, the FTSE 100 lost 2.0% and the Shanghai Composite dropped 5.6%. China provided an interesting contrast. Xi may have arrived in Washington with considerable strategic leverage, but geopolitical leverage is not the same as economic strength. The summit did little to remove the longer-running questions surrounding China’s domestic economy or its trading relationship with the West.

Precious metals produced another surprise. Gold fell 8.0% and silver almost 20% during a month of rising oil, geopolitical confrontation and inflation anxiety. Higher yields made holding non-income-producing assets more expensive, while earlier gains left plenty of room for profit-taking. September was not a conventional rush towards safety.

Bitcoin went the other way, gaining 6.9% to $83,554. That does not suddenly make crypto a geopolitical haven. Its strength alongside the Nasdaq suggested investors remained prepared to take risk where they believed the potential returns justified it.

Markets have proved remarkably good at absorbing shocks this year. September did not break them, but it added to the pressure. Oil remains above $100 as winter approaches, borrowing costs are high, inflation risks have risen and neither the US-China rivalry nor the stand-off with Iran has been resolved.

How many shocks can markets absorb at the same time?