Despite AI-driven gains, Australian and US shares faced declines amid rising bond yields and energy costs, highlighting underlying economic challenges and market concentration risks.
Artificial intelligence remained the market’s main support in September, but it was not enough to hide a broader slide in equities as higher bond yields, elevated borrowing costs and stronger energy prices damped investor confidence. According to Financial Standard, Australian shares fell more than 3% over the month, with 10 of the market’s 11 sectors ending lower, while US shares declined only 0.5% on the headline index.
David Colosimo, head of fixed interest at UniSuper, said that broad measure of US performance was misleading because the equal-weighted market fell by more than 5%. In his view, that suggested the weakness in American equities was as pronounced as, or even worse than, the decline in Australia once the biggest technology names were stripped out. The gap underlined how concentrated the recent rally had become, with a small group of AI-linked stocks doing much of the heavy lifting.
The technology theme still produced striking winners. Semiconductor shares gained 10%, while Meta rose 27% after unveiling new products, including its AI assistant, Muse. But the same technology wave was also unsettling other companies, with Expedia sliding 17% and Amazon down 4% on concerns that AI could disrupt established business models. Axios has separately reported that the AI boom has helped drive an estimated $12.8 trillion increase in American wealth in the second quarter of 2026, a surge that has strengthened consumer spending but widened inequality by concentrating gains among the richest households.
Colosimo said two forces were weighing most heavily on markets: the jump in oil prices and the rise in bond yields. He warned that tight oil supply could deepen inflation pressures, while higher yields across major economies reflected sticky inflation expectations, resilient growth and the growing need to fund AI-related investment. Australian mining shares also struggled, with BHP, Rio Tinto and Fortescue each falling between 5% and 8% amid worries about Chinese demand and the global growth outlook. Looking ahead, Colosimo said October’s market focus would turn to US corporate earnings, the midterm elections, inflation figures and central bank decisions, with the Federal Reserve still possibly able to tighten further while the Reserve Bank of Australia may pause to assess the impact of its latest move.
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