The conflict in Iran dominated March, driving elevated uncertainty and volatility across equity markets as WTI Crude futures pushed above $100 a barrel and disruptions to Strait of Hormuz shipping raised the prospect of broader inflationary pressures.
A near-term resolution would likely contain the damage to a transitory energy price spike, while a prolonged engagement risks amplifying inflationary pressures across raw materials and industrial inputs well beyond the gas pump.
Encouraging geopolitical headlines on the final day of the month were welcomed by markets, though it remains far too early to conclude that a resolution is at hand—history suggests equity markets are resilient after such shocks, typically absorbing the impact within one to three months.
Rotation from growth to value accelerated through March as capital continued shifting toward industrials, energy, and other sectors with steadier cash flows—reinforcing the importance of balance and diversification as market leadership evolves away from concentrated mega-cap growth names.
Rates surged amid geopolitical inflation fears: The 10-year Treasury jumped from 3.94% to 4.43% in March—its largest monthly move in over a year—as rising oil prices tied to Iran conflict risks sparked concerns the Fed may need to combat renewed inflation.
Fed remains patient despite rising uncertainty: While holding rates steady at 3.50%–3.75%, Powell emphasized a measured approach—acknowledging near-term inflation pressures but signaling no immediate policy shift as longer-term expectations remain anchored.
Equity Market Overview
March was dominated by headlines and developments surrounding the conflict in Iran, leading to elevated volatility and declines across equity markets. What began in late February with U.S. and Israeli strikes on Iranian targets has evolved into the primary uncertainty confronting both investors and policymakers, disrupting shipping through the Strait of Hormuz, pushing WTI Crude futures above $100 a barrel, and raising the prospect of broader inflationary pressures that extend well beyond energy prices alone.
The central question markets are wrestling with is not whether the conflict has an economic cost, but how large and how lasting that cost will be.
Surge in Oil Prices
Surge in Oil Prices
Performance Review & Outlook
Highlights
Equity Market Overview
March was dominated by headlines and developments surrounding the conflict in Iran, leading to elevated volatility and declines across equity markets. What began in late February with U.S. and Israeli strikes on Iranian targets has evolved into the primary uncertainty confronting both investors and policymakers, disrupting shipping through the Strait of Hormuz, pushing WTI Crude futures above $100 a barrel, and raising the prospect of broader inflationary pressures that extend well beyond energy prices alone.
The central question markets are wrestling with is not whether the conflict has an economic cost, but how large and how lasting that cost will be.
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