March gave investors plenty to think about. Equities and bonds both saw losses as the near- and longer-term implications of the war in Iran remained uncertain.
After a strong start to 2026, much of those early gains have now been unwound, leaving returns broadly back where they started.
You can download the market commentary as a client friendly PDF here: March market commentary.
1. The conflict in Iran rages on
The ongoing war in Iran has been the primary driver of global market anxiety, casting a long shadow over energy supply and security.
This geopolitical crisis has sparked considerable volatility across equities, bonds, and commodities. For portfolios, the overarching concern is a prolonged disruption to global oil supplies, which could trigger a secondary inflationary spike, just as central banks thought they had the upper hand.
Against this backdrop, sentiment has shifted quickly, with mixed signals from the US and Iran prompting near-daily moves in equity markets as investors reassess the latest developments.
We’ve shared a more detailed update for advisers, outlining how we’re positioning portfolios and navigating the current environment here: The war in Iran: an update on markets and our investment solutions. We’ll also be hosting a webinar at 11am on Thursday 23rd April where we’ll be going into more detail and answering your questions on the Iran war. Save your spot here.
2. Is the US economy cooling?
Recent data has started the challenge the US growth story, with several softening indicators emerging at the same time.
Manufacturing output has stuttered, and a noticeable cooling in the labour market – reflected in slowing payroll growth and a modest rise in unemployment. Perhaps most concerningly, consumer spending – the traditional engine of US economic resilience – is showing signs of fatigue.
3. Rates on hold
In a coordinated show of caution, the Federal Reserve, the Bank of England, and the European Central Bank all opted to keep interest rates unchanged this month.
This "wait-and-see" approach is largely a response to the uncertainty created by the Iranian conflict, particularly the potential for sustained price shocks as transit through the Strait of Hormuz remains blocked.
Crucially, market sentiment has pivoted; investors are now beginning to price in the possibility of further rate rises rather than cuts, as the inflationary risks from prolonged geopolitical tension increase. Unlike the reactive stance taken in 2022, there is a clear desire among policymakers to be proactive in the face of these new inflation dangers.
4. Inflation steady in the UK and US… for now
Headline inflation figures in both the UK and the US remained stable for March, broadly in line with consensus expectations.
However, these figures come with a significant caveat: the latest data captures a period prior to the Iran war and the subsequent energy supply disruptions. While the current "steady" reading offers a momentary sense of calm, it likely represents the calm before the storm.
As a result, the "last mile" of the inflation fight has suddenly become significantly more complicated, making the achievement of 2% targets look increasingly challenging in the short term.
5. Nvidia pushes a positive narrative
Against a more uncertain macroeconomic and geopolitical gloom, the technology sector continues to provide a powerful and profitable counter-narrative, led by exceptionally bullish commentary from Nvidia.
The AI leader has signalled that the global appetite for high-performance chips remains strong, reinforcing conviction that we’re in the early stages of a major technological transformation.
Whether this proves true or not, it doesn’t alleviate the significant concentration risk within the US market. With such a high proportion of indices tied to the AI theme, diversification remains key.
| Name | 1m | 3m | YTD | 1yr | 3yr |
|---|---|---|---|---|---|
| FTSE Actuaries UK Conventional Gilts All Stocks | -4.01 | -1.85 | -1.85 | 2.52 | 1.26 |
| ICE BofA Global Corporate | -2.07 | -0.45 | -0.45 | 4.43 | 15.74 |
| ICE BofA Global High Yield | -1.63 | -0.61 | -0.61 | 6.36 | 27.57 |
| FTSE All Share | -6.68 | 2.41 | 2.41 | 21.54 | 45.56 |
| FTSE USA | -3.12 | -2.85 | -2.85 | 14.61 | 53.69 |
| FTSE World Europe ex UK | -8.72 | -1.96 | -1.96 | 16.50 | 37.82 |
| FTSE Japan | -10.65 | 3.67 | 3.67 | 23.68 | 45.17 |
| FTSE Asia Pacific ex Japan | -11.38 | 1.23 | 1.23 | 24.48 | 37.82 |
| FTSE Emerging | -8.52 | -0.85 | -0.85 | 17.35 | 36.19 |
Source: FE Analytics, GBP total return (%) to last month end
This article is for financial professionals only. Any information contained within is of a general nature and should not be construed as a form of personal recommendation or financial advice. Nor is the information to be considered an offer or solicitation to deal in any financial instrument or to engage in any investment service or activity. Parmenion accepts no duty of care or liability for loss arising from any person acting, or refraining from acting, as a result of any information contained within this article. All investment carries risk. The value of investments, and the income from them, can go down as well as up and investors may get back less than they put in. Past performance is not a reliable indicator of future returns.
