CAPITAL SEASONS

Weekly Market Commentary

Week Ending 26 September 2026

Global Context Overview

The headline numbers still look calm. The S&P 500 sits 7.4% above its 200-day average and the Nasdaq is running 4.5% above its 50-day line — both comfortably in an uptrend. The VIX closed the week at 14.87, its four-week average now 15.01, well inside “quiet” territory. Gold pulled back 8.1% on the month after a strong run — a breather, not a breakdown, since it’s still higher over the past year. The dollar firmed modestly (UUP +2.4% on the month).

But look one layer down and the picture changes. The average return across our full sector universe was negative 3.7% this month, even as the S&P itself edged up 0.7%. That gap — index up, breadth down — is the story this week, and it isn’t new: it’s the fourth straight week our composite score has declined, from 7.39 four weeks ago to 6.81 last week to 6.52 this week. In David Paul’s terms, one week is a signal; four weeks is a pattern.

The clearest expression of that pattern is inside the cap tiers. Mega and Large caps are still showing healthy positive sentiment (+16.7% and +13.6% respectively), Mid caps positive but softer (+9.7%), and Small caps have now flipped negative (-2.5%) for the first time in this cycle. Our Small-cap “canary” — the share of small caps carrying a Strong Sell signal — hit 10.0% this week, right at the watch threshold. Historically this kind of Mega/Large-holding-up-while-Small-rolls-over divergence has led broader weakness by four to eight weeks. It is not a warning to act. It is a warning to pay attention.

Adding to that picture: two central banks tightened policy in the same week. The US Federal Reserve raised its benchmark rate 25 basis points on 16 September, to 3.75%–4.00% — its first hike since 2023, and the first policy move under new Chair Kevin Warsh, passed unanimously on hotter-than-expected inflation data. One day earlier, the South African Reserve Bank hiked its own repo rate 25 basis points to 7.00%, citing inflation risk from the oil price surge and rand pressure. A less accommodative rate backdrop on both fronts is exactly the kind of shift that tends to show up first in smaller, more rate-sensitive names — which lines up with what we’re already seeing in the cap-tier data above.

South Africa

The JSE was roughly flat on the month (-0.5%) but remains up a striking 36.5% over the past year. The rand weakened 2.4% against the dollar this month — a near-term positive for the rand value of your US holdings — though it’s worth remembering the rand has actually strengthened 6.8% over the past twelve months, which has been a quiet headwind on those same holdings measured over the full year. Both things are true at once; neither cancels the other out. The SARB hiked its repo rate 25 basis points to 7.00% on 15 September, a 4-2 vote, as the committee weighed persistent oil-driven inflation risk and rand pressure against a still-fragile growth backdrop.

United States

The labour market keeps quietly defying expectations. August nonfarm payrolls came in at +162,000, roughly three times the ~55,000 consensus, with unemployment steady at 4.1%. ADP’s private read was softer at +38,000, and weekly jobless claims sit at 218,000 — still historically low. The Federal Reserve raised rates 25 basis points on 16 September to 3.75%–4.00%, its first hike since 2023 and the first policy decision under new Chair Kevin Warsh — a unanimous 12-0 vote, driven by inflation data that came in hotter than the committee had been willing to tolerate. Earnings, meanwhile, are the one pillar still doing real work: Q3 S&P 500 earnings are tracking an estimated +28.9% year-over-year, which would mark a third straight quarter above 25% growth, and the forward P/E of 19.1x sits below the five-year average — so despite index levels near highs, valuation on a forward-earnings basis isn’t stretched.

Global Markets

Oil remains the wildcard. WTI pulled back roughly 3% this week but stays historically elevated, still trading well above where it started the year, as the US-Iran conflict and intermittent Strait of Hormuz disruptions keep a risk premium embedded in the price. That’s shown up directly in refining-sector strength this year — and it’s now a direct line to both the SARB and Fed decisions above, since oil-driven inflation was cited by both.

Summary

Region	Earnings	Inflation	Interest Rates
South Africa	Stabilising	Elevated, oil and rand-driven	Hiked 25bps to 7.00% (15 Sept)
United States	Improving (Q3 tracking +28.9% YoY)	Hotter than tolerated	Hiked 25bps to 3.75-4.00% (16 Sept) — first since 2023
Global	Mixed — earnings strong, breadth narrowing	Oil-driven upside risk (Hormuz)	Tightening bias returning across major central banks

Guidance For Investors

• Don’t let calm headline indices distract from cooling breadth underneath — the divergence is real and now four weeks old
• Two central bank hikes in the same week mark a genuine shift from “on hold” to tightening — worth updating your mental model, not just noting in passing
• Small-cap weakness tends to lead, not follow — this is a “watch” signal, not a “sell everything” signal
• Earnings and forward valuation still support the broader trend; this isn’t a 2021-style stretched market
• Oil-driven inflation risk is now feeding directly into policy on both sides of the Atlantic — don’t assume it’s fully priced in
• Stay disciplined on position sizing into names already near highs; let deterioration confirm itself over another week or two before reacting
• Patience over prediction: nothing here calls for portfolio action today, only attention

Capital Seasons Weather Map

This week’s Capital Seasons Weather Map registers Spring, with Mixed Conditions and a Patient, Watching posture.

• Trend assessment: both major indices remain comfortably above their 50-day averages — the uptrend itself is intact
• Participation and rotation: narrowing — Small caps have turned negative while Mega/Large hold up, a divergence with a historical 4-8 week lead time
• Volatility and stress: low and stable (VIX 14.87, four-week average 15.01) — no fear priced in, even as two central banks just tightened
• Liquidity backdrop: dollar modestly firmer this month; rate hikes on both sides of the Atlantic are a mild incremental headwind for risk assets generally
• Tactical discipline close: When the surface is calm but the internals — and now policy — are quietly shifting, the right response is closer attention, not activity.

Website Weather Commentary

Markets held their ground this week, with major indices still comfortably above trend and volatility low. Beneath the surface, participation has narrowed for a fourth straight week, with smaller companies lagging their larger peers. Both the US Federal Reserve and the SARB raised interest rates this week, a genuine shift after months on hold. Earnings remain a genuine bright spot, with growth still tracking well above historical norms. Conditions call for patience, not action.

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Disclaimer: Capital Seasons is an educational platform. Content does not constitute personal financial advice or a solicitation to buy or sell any security. Always consult a licensed financial advisor before making investment decisions.