Concerns about global growth and US monetary policy drove markets to new lows last month, with global equities experiencing their worst September quarter since 2011, according to AMP Capital.
In an economic update, AMP Capital chief economist Shane Oliver said global shares returned -8.1 per cent this September, with Australian shares returning -8.0 per cent.
“We are still at risk of more weakness in the next few weeks as global growth and Fed concerns remain,” he said.
“This is particularly so for the US share market that has had the smallest decline but is the most vulnerable in terms of valuations on some measures, and the only major market with a central bank getting close to tightening.”
Mr Oliver pointed out that from their highs earlier this year, US shares have had a fall of 12 per cent. Australian shares experienced a fall of 18 per cent, eurozone and Japanese equities recorded -19 per cent, emerging markets -22 per cent and Chinese shares lost 43 per cent.
However, Mr Oliver said a weak September is now behind investors, indicating the cyclical bull market is likely to resume as a result of attractive valuations and easy monetary conditions.
“It makes sense to start averaging into shares over the next month or so for those looking to allocate cash," he said.
Mr Oliver said recent market movements are following a similar pattern to that seen on two earlier occasions.
“In both 1998 and 2011, [markets] saw initial sharp falls into August, followed by a bounce and then a retest or new lows around late September/October, followed by gains into year end," he said.
“History may not repeat but it does rhyme."
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