Market Update March 2026

March 2026 will be remembered as the month geopolitics took full control of financial markets. The US-Iran conflict, which began on February 28 with coordinated US-Israeli strikes on Iranian military and energy infrastructure (“Operation Epic Fury”), escalated rapidly throughout the month. Iran retaliated with missile and drone strikes on US and Israeli targets, attacked Gulf state energy facilities, and effectively shut down the Strait of Hormuz. With roughly 20% of global oil supply normally flowing through the strait, the disruption represents the largest oil supply shock in history.

Brent crude surged from the low $80s at the start of March to above $110 by month-end, with physical delivery prices in Asia reaching $126. US gasoline prices crossed $4 per gallon nationally for the first time since 2022. Equity markets sold off broadly, with the S&P 500 posting five consecutive weekly losses and the STOXX 600 heading for its worst monthly decline since mid-2022. Gold, paradoxically, experienced its sharpest weekly drop in over four decades as dollar strength, hawkish central bank repricing, and forced liquidation overwhelmed safe-haven demand. All three major central banks held rates unchanged in March, each acknowledging the conflict as the dominant source of uncertainty.

Geopolitical Developments

The war in Iran defined the entire month. Following the initial US-Israeli strikes on February 28, both sides escalated significantly. The US expanded its bombing campaign to include military and civilian infrastructure across Iran, while Iran shut down transit through the Strait of Hormuz, attacked tanker vessels, and struck energy infrastructure across the Gulf, including Saudi refineries, Kuwaiti fuel terminals, and Qatar’s Ras Laffan, the world’s largest LNG export hub. Iran’s new Supreme Leader, Mojtaba Khamenei, declared the strait closure a deliberate pressure tool, while the US moved thousands of additional troops to the region and speculation mounted about a potential ground operation. Around 200 vessels were stranded, and tanker traffic dropped to a near-standstill.

In response to the supply shock, the US and allies released 400 million barrels from strategic petroleum reserves, the largest coordinated release on record, and temporarily lifted sanctions on some Russian and Iranian oil. These measures kept benchmark futures prices somewhat below physical market levels, but they are finite: analysts increasingly warned that if the Hormuz closure persists, the stopgap measures will prove insufficient.

Throughout the second half of March, volatile headlines around peace talks whipsawed markets daily. On March 22, Trump signaled “productive” negotiations, triggering a massive relief rally. But Iran denied direct talks, and the optimism faded within hours. By month-end, Pakistan, Saudi Arabia, Egypt, and Turkey were mediating, and a US 15-point peace plan had reportedly been sent to Tehran. Yemen’s Houthi rebels also joined the conflict, striking Israeli targets and threatening the Bab al-Mandab Strait, another critical shipping route. Spain publicly rejected involvement, calling the war a “unilateral escalation,” while other European allies struggled with their response.

Grafik 1: Daily number of transits, out of the Middle East Gulf

Market Developments by Asset Class

Equities

Equity markets spent March navigating what increasingly looks like a stagflationary shock: slower growth from the energy disruption combined with rising inflation. The S&P 500 declined roughly 8% from its January 27 all-time high of 7,002, closing the month around 6,340 after five consecutive weekly losses, the longest such streak since 2022. The index fell below both its 50-day and 200-day moving averages, and the VIX briefly topped 30. The Nasdaq entered correction territory, falling over 13% from its peak.

A pronounced sector rotation unfolded beneath the surface. Energy was the clear winner, up over 30% year-to-date and the only positive S&P 500 sector since the war began. Defense stocks advanced alongside. On the other side, airlines, travel, and fuel-sensitive industries sold off sharply as energy costs surged and Middle Eastern airspace closures disrupted global air traffic.

European equities suffered disproportionately given the continent’s heavy dependence on energy imports. The STOXX 600 briefly dropped 10% from its record highs before recovering partially on ceasefire hopes. Banks, technology, and travel led the declines. The European Commission reported that economic sentiment and consumer confidence plummeted in March, and eurozone inflation jumped to 2.5% from 1.9% in February, driven almost entirely by energy prices swinging from negative 3.1% to positive 4.9% year-on-year. Core inflation, however, edged slightly lower to 2.3%, suggesting the shock has not yet broadened beyond energy.

In Switzerland, defensive sectors such as healthcare and consumer staples held up, but the strong Swiss franc weighed on exporters. The franc touched an 11-year high against both the dollar and the euro on safe-haven demand, with EUR/CHF briefly breaking below 0.90 before settling around 0.91. The SNB held rates at 0% at its March 19 meeting and explicitly stated that its “willingness to intervene in the foreign exchange market has increased,” with Chairman Schlegel warning that rapid appreciation poses a risk to price stability.

Emerging markets faced pressure from a stronger dollar and risk-off sentiment. Oil-importing nations were particularly affected, while some exporters benefited. Intraday volatility was extraordinary throughout the month, with equity indices swinging several percent and oil prices moving as much as $35 per barrel within single sessions, all driven by geopolitical headlines.

Real Estate

Swiss real estate remains supported by the low interest rate environment. With the SNB at 0% and no imminent prospect of hikes, mortgage rates remain stable, providing valuation support. Residential demand in urban centers continues to benefit from constrained supply, and prime assets remain more resilient than secondary commercial stock.The geopolitical shock introduces new uncertainty. A prolonged conflict driving sustained inflation could eventually force the SNB toward either negative rates or more aggressive intervention, either of which would change the calculus for rate-sensitive valuations. For now, fundamentals remain intact: scarce supply, stable cash flows, and the franc’s safe-haven status continue to underpin Swiss real estate as a diversifier in CHF portfolios.

Bonds

Fixed income markets were caught between inflation fears and recession concerns. In the first half of the month, the oil shock dominated, pushing yields higher. The US 10-year rose from around 4.15% at the start of March to 4.44% by March 27, its highest since July 2025. The 30-year approached 5%. The Federal Reserve held rates steady at 3.50% to 3.75% at its March 18 meeting. The updated dot plot still signals one cut in 2026, but the range of views widened materially. Chair Powell acknowledged that the economic impact of the war is deeply uncertain and noted that inflation had not come down as much as “hoped.” Updated projections reflected higher inflation (PCE revised to 2.7%) and lower growth, reinforcing the Fed’s “wait and see” posture. Toward month-end, growing recession fears gained the upper hand. On March 30, a flight-to-quality rally briefly pushed the 10-year below 4%, signaling that the market now fears economic contraction more than the inflation spike. Markets oscillated between pricing in a possible Fed rate hike and reverting to expectations for one cut. In Europe, the ECB also held rates unchanged on March 19 (deposit facility at 2.0%), citing the war as making the outlook “significantly more uncertain.” Staff projections revised headline inflation up to 2.6% for 2026 and cut GDP growth to just 0.9%. The market reaction was dramatic: rate hikes are now priced at 84% probability for 2026, a stark reversal from the rate-cut trajectory expected just weeks ago. Swiss government bonds benefited from safe-haven demand, and the SNB’s decision to rely on FX intervention rather than negative rates gave the market some comfort, though the near-term inflation forecast was raised to 0.5% as energy costs filter through.

Commodities

Crude oil was the defining market story of March. Brent futures rose approximately 36% from the last pre-war trading day through late March, crossing $113 per barrel. Physical delivery prices surged even further, with the Dubai benchmark up roughly 76% to $126, reflecting the severity of actual supply disruptions versus paper market pricing that still factors in a potential quick resolution. WTI settled above $100 for the first time since 2022. European natural gas prices jumped around 25% to above €68 per megawatt hour, their highest in over three years, after Iranian strikes on Qatari LNG infrastructure reignited competition between Europe and Asia for available cargoes.

Gold experienced a historic reversal. After a record-breaking 65% return in 2025 and all-time highs near $5,600 in January, the yellow metal fell nearly 11% in a single week in late March, the worst weekly decline since 1983. Three forces drove the sell-off. The US dollar strengthened against all G10 peers, as the US is a net energy exporter and thus relatively insulated from the oil shock. Hawkish repricing of monetary policy expectations eroded gold’s appeal. And forced liquidation of crowded long positions, combined with concerns that Middle Eastern sovereign wealth funds may sell gold to raise liquidity, added further pressure. Gold ended the month around $4,400 to $4,600, more than 20% below its January record. Industrial metals such as copper and palladium also declined on recession fears.

Everon Strategien

Income Strategie

March was a difficult month for global equity markets, with most major indices posting meaningful losses amid the geopolitical and energy shock. Against this challenging backdrop, our income strategies have continued to demonstrate their defensive qualities on a year-to-date basis, holding up better than their respective benchmarks.

In Switzerland, the income strategy is up 0.42% year-to-date, while the Swiss dividend benchmark is down 0.94% over the same period. Remaining in positive territory since the start of the year, despite the broad-based selling seen in March, underscores the value of disciplined stock selection and the consistent equal weighting of positions, which ensures broader market coverage and reduces concentration risk.

Internationally, our North American income strategy has continued its strong run, delivering a 3.12% return year-to-date compared with 1.47% for the S&P 500. The strategy’s tilt toward high-dividend names and its broader mid-cap coverage have provided additional sources of diversification and resilience, particularly as large-cap technology came under pressure during the month.

Grafik 2: Income Switzerland Equities vs Swiss Dividend Benchmark

Multi Factor Strategie

Our multi-factor strategies have also held up well year-to-date in a challenging environment. The European multi-factor strategy is up 1.72% since the beginning of the year, supported by strong individual contributions, with TotalEnergies standing out as a notable positive performer in the energy space.

As with the income strategies, the broader market coverage has proven advantageous. By combining several factors such as valuation, quality, momentum, and risk in a diversified portfolio, the approach benefits particularly in phases where market leadership is distributed across a wider set of companies rather than concentrated in a few index heavyweights. This characteristic has been especially valuable in the current environment of heightened sector rotation and elevated dispersion across markets.

Outlook

The path forward hinges almost entirely on the duration and intensity of the conflict. A short resolution would likely see oil prices retreat, inflation fears subside, and equity markets recover sharply given how much risk has been priced in. A prolonged war risks genuine stagflation, with oil sustaining above $120, inflation becoming entrenched, and central banks forced into tightening cycles that further weigh on growth.

The macroeconomic backdrop before the war was constructive: US manufacturing PMIs had expanded for two consecutive months, eurozone growth showed stabilization, and inflation was trending toward target. The AI investment cycle continues to provide a structural growth impulse. These factors offer some cushion, but they cannot fully offset a sustained energy shock of this magnitude. Markets remain suspended between two narratives, and the coming weeks will be decisive.