Investment Market Update: September 2026
If August belonged to company results, September belonged to central bankers and the oil market. The month opened on an uneasy note. US forces struck Islamic Revolutionary Guard Corps targets in Iran, and concerns about inflation, alongside elevated oil prices, pushed bond yields higher in the US and elsewhere. From there, attention turned to a pivotal week in the middle of the month, when policymakers in Washington and London each delivered their decision on interest rates.
UK markets
The FTSE 100 ended a subdued month at 10,606.00. Having begun September close to 10,790, it gave back roughly 1.7% over the month. It is worth stepping back, though, because the longer view is a more reassuring one: the index remains around 12% higher than it was a year ago.
US markets
In the US, the S&P 500 closed at 7,651.54, a modest monthly fall of 0.5%. That headline figure masked quite different fortunes beneath the surface. The Dow slipped 4.3%, while the technology-focused Nasdaq rose 1.9%. Over the third quarter as a whole, the S&P 500 was 2% higher.
Interest rates
The Federal Reserve raised its benchmark rate by a quarter of a percentage point, to a range of 3.75% to 4%. It was the Fed's first increase since 2023, and its updated projections point to the possibility of another rise before the year ends. That marks a notable change of direction for a central bank that was cutting rates only last year.
The following day, the Bank of England kept Bank Rate at 3.75% in a 6–3 vote, with three members favouring a rise to 4%. The Bank's own projections suggest inflation may climb a little further before it eases. It expects inflation of around 3.75% in the final quarter of this year, rising slightly above 4% in early 2027. The Committee next meets on 5 November.
Inflation
UK inflation rose to 3.1% in the year to August, up from 2.9% in July, with petrol and diesel making the largest upward contributions. There was some encouragement, too. Core inflation, which excludes energy, food, alcohol and tobacco, held steady at 2.6%. That suggests the pressure is concentrated in energy rather than spreading more widely across the economy. September's figures will be published on 21 October.
Key figures at a glance
FTSE 100: 10,606.00 (down around 1.7% in September)
S&P 500: 7,651.54 (down 0.5% in September)
UK inflation (CPI): 3.1% (August)
Bank of England base rate: 3.75% (held on 17 September)
US Federal Reserve: 3.75% to 4% (raised on 16 September)
What this means for your portfolio
We understand that headlines about rising prices, conflict and higher borrowing costs can be unsettling, and it is entirely natural to wonder what they mean for your own investments. September also offered a gentle reminder of why diversification matters. Within a single market, one index fell noticeably while another rose. Returns rarely move in step, and a portfolio spread across different regions and sectors is designed with exactly these moments in mind. Higher interest rates bring some welcome news for savers, too, in the form of improved returns on cash, which may be worth bearing in mind as part of your wider plans.
If you are wondering what the current climate means for the cash you hold, our article 5 Questions to Ask About Your Cash Savings in a Changing Rate Environment explores some of the considerations worth weighing. And if you would like to talk through your portfolio, or anything you have read here, we are always here and would be delighted to hear from you.
This blog is for information purposes and does not constitute financial advice, which should be based on your individual circumstances. Tax treatment depends on individual circumstances and is subject to change