March 2026 was defined by a single event. The consequences of the US and Israeli strikes on Iran, and the effective closure of the Strait of Hormuz, drove every major market story of the month. Markets responded to almost every headline. Central banks held their nerve. Investors weighed inflation against growth, day by day, sometimes hour by hour.
This commentary covers what happened, what it means, and the principle that has carried us through several similar periods in recent years.
The headline event
The 28 February strikes on Iran, and the disruption to the Strait of Hormuz that followed, sent shockwaves through energy, equity and bond markets. Around 20% of the world's oil and liquefied natural gas passes through that channel. By mid-March, Brent crude had pushed past $100 per barrel for the first time since 2022, peaking near $120 as Iran launched retaliatory strikes across Gulf infrastructure. European natural gas prices surged 70% over the month.
President Trump's 23 March announcement of a pause in military action briefly calmed markets, before Iran's foreign minister dismissed reports of direct talks. As March ended, the situation remained fluid and unresolved.
United States
The Federal Reserve held rates steady at its 17 to 18 March meeting, voting 11-1 to keep the target range at 3.5 to 3.75%. Fed Chair Jerome Powell described the conflict as a potential stagflationary shock, simultaneously pushing inflation up and growth down, while stopping short of using the term itself. The Fed's March projections pencilled in one rate cut in 2026, down from two before the conflict.
The economic data deteriorated alongside the geopolitical shock. US unemployment rose to 4.4% in February. Petrol prices crossed $4 per gallon nationally for the first time since late 2023. The S&P 500 fell from 6,816 on 3 March to around 6,477 by 27 March, a decline of around 5%.
United Kingdom
The Bank of England held its base rate at 3.75% at its 19 March meeting, in a unanimous 9-0 vote. Markets that had previously priced in rate cuts by April or May were, by late March, pricing in the possibility of hikes later in the year. Energy prices for consumers are set to fall in the short term thanks to a 7% reduction in the price cap, but immediate increases to Council Tax, water bills and food costs are putting significant political pressure on the government.
The FTSE 100 had reached its all-time closing high of 10,910.55 on 27 February. By 23 March it had fallen to 9,894, down 7%. It briefly recovered above 10,100 following the ceasefire statement before closing the month at 10,176. BP and Shell were standout performers within the index, benefiting from higher oil prices, while banking stocks weakened. UK consumer confidence fell to its lowest level since the end of 2022.
Europe
Europe's economic momentum, which had appeared genuinely encouraging at the start of 2026, has been derailed by the energy shock. The Eurozone Composite PMI had reached 51.9 in February, its best reading in some time. By late March, business activity was indicating stagnation, with input costs rising at their fastest pace in three years.
The European Central Bank held its main refinancing rate at 2.15%. President Christine Lagarde revised headline inflation projections to 2.6% for 2026 and cut the eurozone growth forecast to 0.9%. The bank set out three scenarios depending on where oil prices settle. In the adverse scenario, inflation could breach 4%.
Far East and Emerging Markets
China set a GDP growth target of 4.5 to 5% for 2026, the slowest in over thirty years. The postponement of the Trump-Xi summit removed a key near-term catalyst for confidence in trade relations. Japan, which relies on the Strait of Hormuz for 70% of its oil imports, released approximately 80 million barrels from national reserves. South Korea activated a $68 billion market stabilisation programme.
Across South and Southeast Asia, governments responded with emergency measures. Thailand told state agencies to work from home to curb fuel demand. Bangladesh, reliant on imports for 95% of its energy, imposed fuel caps and rationed cooking gas. The Philippines declared an energy emergency. Approximately 84% of crude oil and 83% of LNG passing through the Strait of Hormuz in 2024 was bound for Asian markets, making the region's exposure structural rather than incidental.
The principle that still applies
Periods like this are uncomfortable. Headlines move daily. Forecasts shift in real time. The temptation to react can feel overwhelming.
The principle that has served well through several similar periods in recent years has not changed. Short-term shocks, however dramatic, have consistently rewarded those who maintained a long-term perspective and resisted the urge to react. The range of outcomes from here is unusually wide. So too are the potential opportunities for those positioned to benefit once calm returns.
For most clients, the right action this month is the same as it was last month, and the month before. Stay diversified. Stay invested. Review the plan against your goals, not against the headlines.
What we are watching
Three things will determine the shape of the next quarter. First, whether the Strait of Hormuz reopens, and how quickly. Until that happens, every economic forecast remains conditional. Second, the Bank of England's late April meeting, where the data dependency of future decisions will be on full display. Third, the rescheduled Trump-Xi summit in May, which will give us the clearest read yet on whether the US-China trade truce will hold into the second half of the year.
If you would like to talk through what any of this means for your own plans, that is a conversation we are happy to have.
Sources: Federal Reserve, Bank of England, European Central Bank, IEA, OECD, FTSE Russell, S&P Global. Full source list available on request.