CAPITAL SEASONS

Spring Holds — On Fewer Legs

Weekly Market Commentary  |  Week ending 2 October 2026

THIS WEEK IN FOUR QUESTIONS What happened? US large-cap tech kept climbing, while small caps, the Dow, credit and gold all slipped below their short-term averages. The US 10-year Treasury yield briefly touched its highest level in more than two decades. Why? A weak US jobs report eased fears of another rate hike, but bond yields above 5% are now real competition for shares. Oil stays elevated on Middle East supply risk. What does it mean for my portfolio? The season is still Spring, but it is being carried by a narrow group of companies. Quality and patience matter more than adding exposure right now. What should I watch next? US inflation data on 14 October, the start of the third-quarter earnings season, and whether small caps steady or slip further.

Global Context

This was a week of two markets. Over the past month, the Nasdaq-100 (QQQ) is up 5.7% and sits 4.6% above its 50-day average. The S&P 500 (SPY) is up 0.6% for the month, just 0.8% above its 50-day line. Everything else gave ground. The Dow (DIA) is down 3.7% over the month, and the Russell 2000 small caps (IWM) are down 4.2%. Both are now below their 50-day averages, and the Dow finished the week down about 1.3%.

Friday showed the tension clearly. The S&P 500 rose 0.7% to 7,722.72 and the Nasdaq Composite gained 1.2%, touching an all-time high during the day before pulling back as Treasury yields turned higher again.

Volatility is calm on the surface, with the VIX at 15.31. Underneath, other signals are less settled:

• Gold (GLD) fell 5.6% over the month and is 8.7% below its 200-day average.
• The dollar (UUP) rose 2.6% and is above both its averages.
• Credit is softening. High-yield bonds (HYG) are down 2.8% for the month, and investment-grade bonds (LQD) are down 3.3%.

South Africa

The rand closed the week at about R16.66 to the dollar, 3.6% weaker over the month. For South African investors holding US-dollar assets, a weaker rand lifts the rand value of those holdings. For everyone else, it adds to the cost of imports and, above all, fuel.

The Reserve Bank moved again on 23 September. The repo rate rose by 25 basis points to 7.25% in a unanimous decision, and the 2026 growth forecast was cut to 1.2% from 1.4%. The Governor warned that headline inflation could move above 5% in the last months of 2026 and into early 2027, with August CPI already up to 4.4% from 4.3%.

Households will feel it at the pump this week. Petrol under-recoveries reached around R3 per litre by late September, pointing to pump prices close to R30 a litre when the new prices take effect on Wednesday, 7 October.

Local equities also eased. Our JSE proxy closed 5.1% below its 50-day average.

United States

The labour market cooled sharply in September. Employers added just 29,000 jobs, well short of the 84,000 economists had expected. Unemployment ticked up to 4.2% from 4.1%, and August was revised down to 133,000. Weekly layoffs remain low, though. Initial jobless claims fell to 197,000 in the week to 19 September, which fits the “low hire, low fire” pattern of the past year.

For markets, the bigger story is interest rates. On Thursday the 10-year yield reached 5.342% and the 30-year 5.683%, their highest levels in more than two decades, before easing after the jobs data. The report raised the chances that the Fed leaves its target range at 3.75%–4% when it meets in late October.

One market observation sums up the week. Stocks and bonds fell together, which is not how they usually behave, because Treasury yields above 5% now compete with shares for investors’ money. That is the DiLiddo framework at work: when interest rates rise, the price investors will pay for future earnings comes under pressure.

The good news sits on the earnings side. Ahead of the third-quarter reporting season, S&P 500 earnings growth is estimated at 29.1% year on year, with the forward P/E at 19.2, and estimates have been revised upward during the quarter. Earnings are doing their part. Rates are making the market pay less for them.

Global Markets

Energy remains the dominant global theme. Oil drifted lower over the week, but at high levels. WTI traded around $90.50 and Brent around $101 on Friday, after Europe announced additional releases of crude and diesel from emergency reserves. The G7 also agreed to consider releasing up to 100 million barrels of emergency oil and diesel reserves over four months. Even so, a tanker was struck by an unknown projectile in the Strait of Hormuz on Thursday, so supply risk has not gone away.

For Europe, high diesel costs remain a drag on growth. For emerging markets, the combination of a firmer dollar and expensive oil is the familiar pressure point, and the rand and Brazilian assets both reflected some of that this month.

The Three Forces

Region	Earnings	Inflation	Interest Rates
South Africa	Stabilising	Under pressure	Under pressure
United States	Improving	Under pressure	Under pressure
Global	Stabilising	Under pressure	Under pressure

Guidance for Investors

• Respect the narrowness. When one sector carries the index, the index looks healthier than the average share. Check how much of your own portfolio’s gain depends on that one theme.
• Let bond yields inform your expectations. With US government bonds yielding above 5%, a share needs a clear earnings case, not just a good story.
• Quality over quantity. This is not the season to add many new names. If you are adding, add to companies with strong balance sheets and improving earnings.
• Mind the earnings calendar. The third-quarter reporting season starts in mid-October. Avoid making decisions on a holding in the fortnight before it reports.
• Fuel costs are a household planning item. Petrol near R30 a litre is worth building into your monthly budget, whatever your portfolio is doing.

Capital Seasons Weather Map

This week’s Capital Seasons Weather Map registers Spring, with Mixed Conditions and a Selective posture. Season status: Transition risk emerging.

• Trend: Both the S&P 500 and Nasdaq-100 remain above their 50-day averages, which keeps us in Spring by our rules. But the S&P margin is thin, at 0.8%.
• Participation: Narrow. Only 3 of the 11 major US sectors are above their 200-day averages (technology, energy and health care), and only a quarter of the 202 industry groups we track rose over the month.
• Volatility: Calm, with the VIX at 15.31.
• Liquidity: Tightening. The dollar is firm, credit is soft, and long-dated yields are at multi-decade highs.

Our Market Pressure Index eased to 6.48, from 6.52 last week, sitting just below the Spring band. Fear remains low. Breadth is still positive but softening. Momentum is the weakest of the three, because most sectors are down over the month.

The cap-size picture tells the same story. Sentiment across our screens is positive for mega and large caps, thinner for mid caps, and negative for small caps, where it weakened again this week. The share of small caps carrying our weakest ratings has now stayed above 10%, the level we treat as an early caution flag, for a second consecutive week. One week is a signal; two weeks is a pattern. Historically, this pattern has tended to show up four to eight weeks ahead of a broader shift.

Tactical discipline: hold quality, add selectively, and have a harvest plan ready, without acting on it yet.

WEBSITE WEATHER COMMENTARY Spring conditions continue, though the season is resting on fewer shoulders. Large technology companies are leading while small caps, credit and gold soften. Volatility remains low, but long-term US interest rates have reached their highest levels in more than twenty years. Earnings expectations for the coming quarter remain firm. The Weather Map holds Spring with a selective posture.

Sector-Sensei

The leadership this month is unmistakable. The top ten industry groups we track are all semiconductors, led by broad chip funds up 15% to 25% over the month. Technology is the only one of the eleven major sectors with a positive month (+8.8%).

At the other end:

• Lithium (−24.6%), junior uranium (−18.8%), biotech (−17.3%), rare earths (−17.1%), silver miners (−13.9%) and oil services (−13.9%) all fell sharply.
• Utilities, real estate and materials fell between 6.7% and 7.7%. That is what we would expect when bond yields rise, because those sectors are most sensitive to interest rates.

This reads as rotation into a single theme, not a broad-based market. That is worth respecting but not chasing.

Silicon Season — An AI Infrastructure Watch

Chips carried the market again this week. Nvidia led the Nasdaq to an intraday record on Friday, and memory and semiconductor names dominated our monthly leadership tables.

Two observations for the long-term investor. First, the AI build-out is still the single biggest driver of US earnings growth, and the companies selling the picks and shovels are reporting it. Second, the cost of that build-out is now showing up elsewhere in the economy. When one theme is both the main source of growth and the main source of concentration, position sizing becomes the most important decision you make.

Portfolio Gardener — Summary

One position fell below our quality floor this week and moves to Weed. Four holdings keep their quality but have lost their footing on price, so they are marked for a light caution trim once a second week confirms the pattern. A handful of names sit just above our quality line and go on the watch list. Several long-standing winners are now well above their long-term averages. They stay in place for Spring, but they head the harvest list if the season turns.

We also ran a value lens over the full universe this week, a margin-of-safety screen in the tradition of Benjamin Graham. The most useful finding was not a stock. It was a reminder: many of the “cheapest” companies on paper were shipping and energy businesses earning record profits at the top of their cycle.

JUST STARTING OUT — Why a low P/E isn’t always a bargain The price-to-earnings ratio, or P/E, tells you how many years of today’s profits you are paying for a share. A low number looks like a bargain, and sometimes it is. But it can also mean the market expects today’s profits not to last. Picture a shipping company enjoying record freight rates because of a crisis far away. Its profits balloon for a while, so its P/E looks tiny. When the crisis eases, rates fall and so do profits, and the “cheap” share suddenly isn’t. Benjamin Graham warned about exactly this: cyclical businesses look cheapest just when their profits are at their peak. So before buying a share because its P/E is low, ask one simple question: are these profits normal for this business, or is this an unusually good season?

Capital Seasons  |  Invest with the seasons. Not the noise.

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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.