March 2026

March did not bring a soft landing. Instead, it delivered a hard reminder that geopolitics dominates markets when a reckless White House tests the limits of power and an Israeli government at war on several fronts sees escalation as strategy, not risk. By month’s end, investors no longer asked if the global economy could absorb a shock, but how close that shock had pushed it toward recession.

The month’s tone was set by the US and Israel attacking Iran, and the rest of March was marked by grappling with the fallout. The assumption that geopolitical dynamics were fragile proved misguided as what began as a military confrontation quickly became a global economic event. After Tehran retaliated against both Israel and US positions in the Gulf, the focus shifted to energy infrastructure and shipping disruptions in the Strait of Hormuz. With Trump alternating between threats and boasts of ending the conflict, Oval Office volatility became as much a market variable as the events themselves.

That escalation alone would have been enough to damage global stability. Making matters worse, Trump simultaneously antagonised allies. The narrative, therefore, shifted from a military crisis in the Middle East to a broader breakdown in Western cohesion, as Trump’s strategy treated Europe less as a partner and more as an adversary, pressuring NATO and criticising perceived weakness. This sequence suggested the volatility was not a one-time event, but a governing approach with longer-term market implications.

This monumental shift in political tone fed directly into the economic story and looks set to define the year. The global economy began to look less like it was cooling and more like it was buckling under a fresh supply shock. Manufacturing surveys in Europe and Asia still contained pockets of resilience, but much of that resilience was false, as delivery delays flattered the headline numbers. Input costs rose sharply. Selling prices followed. Hiring weakened. Underneath the surface, demand was softer, and margins were under pressure. The world is not enjoying a healthy expansion; it is being hit by a new inflation shock.

Europe was especially vulnerable as these global forces played out. Already struggling before oil and gas prices surged, by March, the region faced imported inflation, weaker trade, and eroding business confidence once more. Germany’s outlook darkened, weakening the entire euro area. These developments demonstrate how Europe’s persistent structural weaknesses left it defenceless against another uncontrollable geopolitical shock.

Asia offered little comfort either. Higher fuel costs, disrupted shipping routes, and weaker external demand quickly hurt both factory sentiment and corporate margins. Japan faced the ugly combination of rising import costs and a weak currency, while China’s manufacturing pulse softened. Policymakers across the region were reminded that an energy shock quickly extends beyond commodity markets, impacting freight, pricing, investment and confidence. By March’s end, the global economy was not just slowing; demand destruction seemed the only route to restoring balance.

These rolling crises left central banks with limited options. In the US, the Federal Reserve kept rates steady but adopted a more cautious tone amid surging oil prices that rekindled inflation fears and softening economic indicators. This eroded the previous consensus that rate cuts were imminent, forcing the Fed to contemplate how to support growth without relaxing its inflation guard; a dilemma now central to monetary policy discussions.

The central banking dilemma was even sharper in Europe. The European Central Bank faced a clear trade-off: respond to weakening growth or rising energy-driven inflation. The Bank of England and the Bank of Japan confronted the same choices, with the yen’s weakness amplifying the risks. March did not prompt dramatic policy action, but it underscored how quickly options can vanish when war and energy markets collide.

Equity markets anticipated these policy constraints quickly. Unlike typical sector rotations, this period saw broad de-risking across global equities, with a massive sell-off followed only by a brief, sharp relief rally. The transition from economic shock to equity turbulence was swift and unmistakable.

In the US, the damage was clear. The S&P 500 and Nasdaq posted heavy losses despite a late surge, down 5.5% and 6.7%. Energy gained; the rest of the market did not; expensive tech shares suddenly faced higher yields, stickier inflation and a tougher growth outlook.

Europe and Asia were hit just as hard, and in some places harder. European stocks fell sharply before clawing back some ground on hopes of de-escalation.  The Dax was down 10.3%, and the FTSE 100 was down 6.7%. In Asia, South Korea suffered one of its most severe episodes of equity stress in years. Japan was squeezed by the toxic combination of higher oil prices, a weaker yen, and rising yields, and the Nikkei 225 fell 13.2%, while the Shanghai Composite Index showed greater resilience, down 6.5%.

Currency moves followed. The USD strengthened because war, oil, and fear still favour the reserve currency, even if its safe haven status is less automatic.

Commodity markets became a referendum on disruption, fear and political caprice. Oil did not rise on conjecture alone. It surged as traders priced a credible threat to one of the world’s most important energy arteries, with Trump’s whims and capacity for sudden escalation amplifying an already febrile market. This was not speculative froth but a hard repricing of physical risk. Brent climbed 43.1% and WTI 52.3%. More striking still was the failure of the usual defensive refuges. Gold fell 11.6% and silver 20.0%, as investors sold what they could in a broader scramble for liquidity rather than shelter.

Given the macro backdrop, focus shifted from crypto, which showed more resilience than in past months. By month’s end, bitcoin was up 0.8%.

In sum, that was the story of March. Trump and Israel drove events, Iran absorbed the first blows, and everyone else absorbed the costs.