Monthly Update | March 2026

Market Snapshot – Energy Shock Drives Sell-Off

March marked a sharp inflection in the global market backdrop, as escalating geopolitical tensions – most notably the outbreak of conflict involving Iran – triggered a broad-based risk-off environment. The resulting surge in energy prices and rising inflation expectations led to simultaneous declines across equities and bonds, while currencies and commodities adjusted rapidly to the new regime.

South African markets were not immune. The FTSE/JSE All-Share declined -11.20%, its weakest monthly performance in years, with losses broad-based across sectors. Resources were particularly hard hit (-17.79%), despite remaining positive year-to-date (+5.52%), reflecting both commodity price volatility and global growth concerns. Financials (-10.33%) and listed property (-11.41%) also declined meaningfully, while industrials were relatively more resilient (-5.39%), albeit still deeply negative year-to-date (-9.29%).

Globally, equity markets sold off across regions. The S&P 500 (-5.09%), Dow Jones (-5.38%) and Nasdaq (-4.75%) all ended the month lower, while Europe experienced sharper declines (Euro Stoxx 50 -9.26%). Japan was the weakest major market (-13.23%), reflecting its sensitivity as a net energy importer. Even relatively defensive markets such as China (-6.51%) ended in negative territory.

Bond markets offered limited diversification. Yields moved higher across all major regions, with the US 10-year rising to 4.32% (+0.37%), while South African 10-year yields increased sharply to 9.17% (+1.20%), reflecting both global inflation concerns and local risk premia.

Currencies reinforced the shift in sentiment. The US dollar strengthened, while the rand weakened meaningfully, with USD/ZAR rising 6.56% to 16.94, highlighting South Africa’s vulnerability as a net energy importer.

Key Trends in March

• Geopolitics dominated markets, with the Iran conflict triggering a sharp repricing of inflation and growth expectations.
• Equities and bonds sold off together, reducing the effectiveness of traditional diversification.
• Energy prices surged, acting as a global inflation shock and tightening financial conditions.
• US dollar strength returned, pressuring emerging markets and weakening the rand.

War in Iran – A Global Energy Shock

March’s defining event was the escalation of military conflict involving Iran, which rapidly evolved into a major global macro driver. The disruption to energy supply -particularly through the effective closure of the Strait of Hormuz-triggered one of the largest oil price shocks in decades, with Brent crude rising more than 60% during the month.

This shock had immediate and far-reaching implications:

• Inflation expectations repriced sharply higher, as energy costs fed through into both consumer and producer prices.
• Central banks shifted to a more cautious stance, delaying or reconsidering rate cuts in favour of a “higher-for-longer” approach.
• Global growth concerns intensified, as higher energy prices act as a tax on consumers and businesses.
• Market volatility increased significantly, with price action driven by real-time geopolitical developments and headlines.

Importantly, markets are now balancing two competing risks:

• A short-lived conflict, allowing for a partial reversal of recent moves, and
• A prolonged disruption, which could lead to sustained inflation pressure and weaker global growth.

While the base case remains for some form of de-escalation, the event has introduced a new layer of uncertainty that is likely to persist in the near term.

United States – Growth Holds, But Risks Rising

Equity Performance:

• Dow Jones: -5.38%
• S&P 500: -5.09%
• Nasdaq: -4.75%

U.S. equities declined meaningfully in March, reflecting a combination of geopolitical uncertainty, rising yields and renewed inflation concerns. While economic data remains mixed rather than weak, the market narrative has shifted toward a more challenging macro environment.

Higher energy prices are beginning to weigh on consumer sentiment and inflation expectations, complicating the Federal Reserve’s policy path. The Fed remains on hold, but the probability of near-term easing has declined as inflation risks re-emerge.

Outlook: The U.S. economy remains relatively resilient, but markets are increasingly sensitive to inflation surprises and policy expectations. Selectivity and diversification remain key as volatility increases.

Europe – Energy Sensitivity Drives Underperformance

Equity Performance:

• Euro Stoxx 50: -9.26%
• FTSE 100: -6.73%

European equities experienced one of their weakest months in recent years, reflecting the region’s acute sensitivity to energy shocks. Rising gas and oil prices have raised concerns around both inflation and growth, placing pressure on already modest economic momentum.

The UK market proved relatively more resilient due to its commodity exposure, which provided some offset to broader weakness.

Outlook: Europe remains highly exposed to energy dynamics. While valuations are more attractive, near-term performance is likely to remain tied to the trajectory of energy prices and geopolitical developments.

Japan – Energy Exposure Weighs Heavily

Equity Performance:

• Nikkei 225: -13.23%

Japan was the worst-performing major market in March, reflecting its heavy reliance on imported energy. The surge in oil prices has direct implications for both corporate profitability and household consumption.

At the same time, rising yields and currency dynamics continue to influence market direction, adding another layer of complexity.

Outlook: Japan remains structurally attractive, but near-term performance is likely to remain volatile and highly sensitive to energy prices and global risk sentiment.

China – Relative Resilience, But Still Negative

Equity Performance:

• Shanghai Composite: -6.51%

Chinese equities declined, although somewhat less severely than other regions. The country’s diversified energy sourcing and increasing domestic production capacity provided some insulation from the global energy shock.

At the same time, ongoing trade tensions and global growth concerns continue to weigh on sentiment.

Outlook: China remains relatively more defensive in an energy shock scenario, but still dependent on global demand and policy support.

South Africa – Broad-Based Sell-Off Amid Global Shock

Equity Performance:

• JSE All-Share: -11.20%
• Resource 10: -17.79%
• Industrial 25: -5.39%
• Financial 15: -10.33%
• SA Listed Property: -11.41%

South African markets experienced a sharp reversal in March, with losses across all major sectors. The decline was driven by a combination of global risk-off sentiment, a weaker rand, rising bond yields and the knock-on effects of higher oil prices.

Resources led the downside despite still positive year-to-date returns, reflecting both commodity volatility and concerns around global demand. Rate-sensitive sectors such as property and financials were also under pressure as bond yields rose sharply.

Outlook: South Africa remains supported by attractive real yields, but near-term performance is likely to remain tied to global risk appetite, currency movements and the trajectory of energy prices.

Currencies – Dollar Strength Returns, Rand Weakens

Key Moves:

• GBP/USD: -1.87% (1.32)
• USD/ZAR: +6.56% (16.94)
• GBP/ZAR: +4.62% (22.41)
• EUR/ZAR: +4.14% (19.58)

The US dollar strengthened meaningfully during the month, supported by its safe-haven status and higher yields. Emerging market currencies weakened in response, with the rand notably under pressure.

Takeaway: Currency moves reinforced tighter financial conditions for emerging markets and added to inflation risks locally.

Fixed Income – Inflation Shock Drives Yield Repricing

10-Year Yields (End-March | MoM change):

• United States: 4.32% | +0.37%
• United Kingdom: 4.86% | +0.62%
• Germany: 3.01% | +0.35%
• Japan: 2.36% | +0.25%
• South Africa: 9.17% | +1.20%

Bond markets came under pressure globally, with yields rising sharply as markets repriced inflation risks. The move was particularly pronounced in South Africa, reflecting both global dynamics and local vulnerability to higher oil prices.

Takeaway: The environment highlighted the challenge of supply-driven inflation shocks, where both bonds and equities can struggle simultaneously.

Final Thoughts – A Regime Shift, Not Just a Volatile Month

March represents more than just a weak month-it marks a shift in the market regime. The Iran conflict has reintroduced geopolitics as a dominant driver, with energy prices now central to both inflation and growth outcomes.

What this means for portfolios:

• Expect higher volatility: markets are increasingly reactive to geopolitical developments.
• Diversification remains critical, but traditional correlations may be less reliable in the short term.
• Real assets and alternatives gain importance in navigating inflation shocks.
• Stay balanced and disciplined, as markets adjust to a more complex macro environment.

While geopolitical shocks are inherently uncertain, history suggests their market impact is often transient over the long term. Maintaining a diversified and disciplined approach remains key to navigating periods like this.