Dear Reader,

Global markets in March suffered their worst monthly decline in three years after military strikes by the US and Israel on Iran sharply escalated geopolitical tension. Investors viewed the action as politically driven and markets reacted swiftly when Iran responded by temporarily closing the Strait of Hormuz—one of the world’s most important oil and gas shipping routes. This led to the largest oil supply disruption in recent history.

As uncertainty rose, investors demanded higher risk premiums, triggering broad market sell‑offs. Oil prices surged dramatically: Brent crude jumped from around US$67 per barrel earlier in March to a peak of US$129, ending the month at US$118. Higher energy prices raised fresh concerns about inflation, slowed global growth expectations and pushed back hopes of interest‑rate cuts.

United States

US markets entered correction territory, although losses eased slightly late in the month on signs the conflict could de‑escalate.

March performance:

• Dow Jones: –5.4%
• S&P 500: –5.1%
• Nasdaq: –4.8%

Economic data sent mixed signals. Inflation remained steady but stubborn:

• Headline inflation (Feb): 2.4%
• Core inflation (Feb): 2.5%

Economic growth weakened meaningfully, with Q4 Gross Domestic Product (GDP) revised down sharply to 0.7%. Inflation measured by the Federal Reserve’s preferred gauge (PCE) edged higher to 3.1%. Given the uncertainty around energy prices and global risks, the Fed kept interest rates unchanged and signalled caution.

United Kingdom & Europe

The UK market held up better than Europe, helped by heavyweight energy companies that benefited from higher oil prices. The FTSE 100 still fell 6.2% for the month.

The economy continued to stagnate, with GDP growth of just 0.1% in Q4. Inflation remained above target at 3.0%, limiting the Bank of England’s ability to ease policy.

European markets were hit hardest due to their reliance on imported energy:

• Germany’s DAX: –10.3%
• France’s CAC 40: –8.9%

Eurozone inflation unexpectedly rose to 1.9%, complicating plans for rate cuts.

Asia

Performance across Asia was mixed.

China proved relatively resilient, having reduced its reliance on Middle Eastern oil. Market declines were moderate and economic data improved, with both manufacturing and services activity returning to growth.

Japan suffered the most from the oil shock due to its heavy dependence on energy imports. The Nikkei fell 13.2% in March. Inflation slowed, giving the Bank of Japan room to delay, though officials signalled a possible rate hike later.

South Africa

South African markets experienced one of their worst monthly falls in nearly 18 years. The All‑Share Index dropped 11.2%, with resource stocks particularly hard hit as precious‑metal prices fell and energy costs rose.

Winners included energy producers and essential‑goods retailers:

• Sasol (+55%)
• Thungela (+51%)
• Shoprite (+4.3%)

Losers were led by gold and platinum miners, with several stocks falling more than 25%.

On the economic front, inflation had been trending lower before the oil shock, reaching 3.0% in February—right in line with the South African Reserve Bank’s new target. However, sharply higher oil prices now pose a clear inflation risk. As a result, the Reserve Bank kept interest rates unchanged and reinforced a “higher for longer” message.