Investment Update April 2026

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Trump-inspired tensions in the US-Middle East escalated sharply through March, causing the largest global oil supply disruption on record, according to the IEA. Crude prices saw sharp weekly rises of more than 22%. Volatility reflected these developments, with the VIX, now correlated with geopolitical events and the oil price, spiking above 35 mid‑month before easing as diplomatic signals emerged. Late‑March saw a risk‑on reversal as geopolitical tensions temporarily softened. A roller coaster month which brought the spectre of stagflation and higher interest rates into view. As ever, we dig into the detail in the Investment Update which follows.

US equity markets experienced significant volatility throughout March as the Iran conflict drove rapid shifts in energy prices, inflation expectations, and risk sentiment. All three major indices were on track to finish the month lower. The S&P 500 fell sharply on several trading days. For example, on March 27 it declined by 1.74% and the Nasdaq fell by 2.38% as geopolitical uncertainty intensified and the market reacted to new war deadlines. This triggered risk control procedures at portfolio level.

Equities came under pressure as oil prices moved above $100 per barrel and as investors priced a higher probability of stagflation. Analysts highlighted that the balance of risks for equities worsened during the month, with volatility climbing and daily index swings becoming common. Late in the month, the market found brief support when reports surfaced of potential diplomatic discussions, which triggered short-lived relief rallies.

Corporate America performed well in the 4th quarter earnings season with around 72% of the S&P 500 firms beating analyst forecasts. We note, however, that this is a weaker result from the previous quarter where “beats” amounted to 82%.

GDP growth weakened notably whilst the labour market also created far fewer jobs than had been expected. Meanwhile inflation expectations spiked higher, linked with oil prices. This is a difficult position for central banks and the Federal Reserve in particular. One input is suggesting lower rates whilst the other point to tighter policy. Consequently, the prospect for rate cuts (for now at least) have been removed.

US Treasuries were volatile throughout March as markets reacted to interest rate expectations. Yields rose for most of the month as higher oil prices increased inflation fears. The 10-year Treasury reached about 4.43%, marking one of its largest monthly increases since mid‑2025.

European equities declined in March as the Iran conflict increased energy and inflation risks across the region. Markets in Europe were more sensitive to rising oil and gas prices because the region relies heavily on imported energy. This pressure contributed to weaker sentiment and broad selling across major indices. Germany’s inflation rate jumped from 1.9% in February to 2.7% in March, driven by a sharp rise in energy prices linked to the war in Iran. Germany’s decision to shut down her nuclear power industry now looks ill advised.

Figure 1. Germany Inflation

Source: Holger Zschaepitz, Germany’s inflation rate jumped from 1.9% in Feb to 2.7% in March, driven by a sharp rise in energy prices linked to the war in Iran…, X (formerly Twitter), March 30, 2026.

Concerns about stagflation grew during the month and strategists noted that the balance of risks had shifted negatively for European markets. Historical data shows that stagflation periods tend to produce lower real equity returns and higher volatility, which influenced investor positioning.

Overall, European equities spent March under sustained downward pressure as investors reassessed the earnings outlook in a challenging environment shaped by geopolitical tension and rising input costs.

UK equities traded under mixed conditions in March as rising energy prices and global geopolitical tension weighed on market sentiment. The UK market remained sensitive to the surge in oil and gas prices that followed the Iran conflict, since the UK relies heavily on imported energy. These pressures added to inflation concerns across the domestic economy.

The gilt market experienced significant turbulence through the month. UK government borrowing costs rose sharply, driven by higher energy prices and concerns about future inflation. The benchmark 10-year gilt yield climbed to around 5 percent, marking its highest level since the financial crisis of 2008. This spike higher reflected investor expectations of possible Bank of England rate rises and a broader repricing of government debt.

By the end of March, gilts were heading for their weakest month since the period surrounding the 2022 Mini-Budget.

The UK’s decision to mothball North Sea oil and gas must surely be revisited against the current geopolitical backdrop.

Meanwhile in Japan, the Nikkei 225 fell around 6.78% over the month as investors reacted to the impact of the Iran conflict on global markets.

Late in March, Japanese stocks rebounded sharply when hopes for reduced military activity lifted global sentiment. The Nikkei 225 rose 5.2% in a single session and the Topix gained 5 percent during this relief rally.

Business confidence in Japan remained relatively stable. Overall, Japan equities showed resilience in March with strong recoveries during periods of improved global sentiment.

We are just weeks from major disruptions to mining, EVs, and all such things due to the supply shock impacting essential materials, such as Helium and Sulfur shortages It is not the end of the world, but it will likely stall the business cycle unless the crisis is solved quickly from here.

Figure 2. Helium and Sulfur Shortage Warning

Source: Andreas Steno Larsen, We are just weeks from major disruptions to mining, EVs, and all such things due to Helium and Sulfur shortages…, X (formerly Twitter), March 27, 2026.

China equities weakened during March as global risk appetite fell. The Shanghai Composite declined about 5.58% over the month as the Iran conflict increased uncertainty and pressured Asian markets.

Market sentiment improved briefly late in the month when hopes for reduced Middle East tensions lifted regional equities. Financial and technology stocks helped lead those gains.

Overall, China equities faced headwinds in March but remained supported by corporate buybacks and selective sector strength.

Commodities were driven mainly by the energy shock created by the Iran conflict. Brent crude moved above $100 per barrel as the Strait of Hormuz remained largely closed and global supply tightened. Oil prices swung sharply throughout the month as traders reacted to shifting war headlines and changing expectations for a potential de‑escalation.

Broader commodities also reflected the volatile backdrop. Gold attracted safe haven demand during periods of heightened market stress, while other metals experienced uneven trading conditions as global risk sentiment changed rapidly. The US dollar revered its downward march and pushed higher, in a reaction which is normal under such circumstances, strengthening around 2.5% against a basket of currencies during the month.

Volatility moved notably higher in March, and we took measured action to ensure it stayed within our prescribed risk corridors while protecting client capital. Clients can rest easy knowing that we are not traders or market timers, and our adjustments are designed to be temporary. We expect the current move to be short in duration and will return to a risk‑on stance when we have sufficient visibility. Although President Trump continues to inject additional uncertainty into markets, the global economy remains in fundamentally good shape with positive earnings growth and supportive momentum. The need to reinforce a strong economic backdrop ahead of the November midterm elections will also be front of mind for the administration. We remain vigilant and maintain a positive outlook.

Written by the Alpha Beta Partners Investment Team

All sources Bloomberg unless otherwise stated.