Global Market Overview
March was defined by a single, sharp macro shock: the outbreak of conflict in the Middle East, which sent oil prices soaring above $100 per barrel and jolted global markets. The month presented a stark reversal from the broadening, more constructive environment seen in January and February.
US economic momentum softened further in March as the outbreak of the Iran conflict weighed on sentiment and activity. The economy had already begun to lose traction, with Q4 2025 GDP growth slowing sharply to +0.7% annualised from +4.4% in Q3. While household consumption and business investment remained broadly constructive, weaker exports and softer government spending dragged on growth, and the emergence of geopolitical risk has materially clouded the outlook.
Headline CPI eased to +2.4% YoY in February, down from +2.7% in January, marking a post-pandemic low, while core inflation remained sticky at +2.5% YoY. However, the disinflationary trend has stalled as the oil price shock feeds through, lifting near-term inflation expectations and complicating the policy outlook. The Federal Reserve maintained a cautious, data-dependent stance at its March meeting, leaving the federal funds rate unchanged at 3.50%–3.75%. However the forward guidance moved more hawkish: the median rate path now points to a single cut in 2026, down from two previously, reflecting the inflationary impulse from higher energy prices.
US risk assets came under sustained pressure through March, with the S&P 500 and Nasdaq Composite entering correction territory during the month. Sentiment improved into month-end, however, as growing signals that the conflict may be nearing its end triggered a sharp relief rally, including a strong rebound in the Dow Jones Industrial Average on 31 March. US 10-year Treasury yields initially surged from below 4% to an intramonth peak of 4.46%, before retracing to close the month at 4.31% amid mounting growth concerns.
Against this backdrop, the MSCI World returned +0.69% in USD for the month, while the S&P 500 returned +2.15% and the Nasdaq 100 +2.34% in USD — modest gains that masked significant intramonth volatility. The MSCI ACWI was broadly flat at -0.18% in USD. The MSCI Emerging Markets Index declined -6.51% in USD, reflecting the combination of a stronger Dollar and energy price pressures on oil-importing economies. Japan’s JPX-Nikkei Index 400 fell -5.23% in USD, while the FTSE 100 declined -1.04% in GBP terms. Global property, represented by the S&P Global REIT Index, declined -0.60% in USD for the month.
In Europe, the Eurozone’s recovery lost momentum in March as rising energy costs disrupted the disinflationary trend seen earlier in the year. Headline inflation had fallen below the ECB’s 2% target to 1.9% YoY in February but surged back to 2.5% in March, driven almost entirely by higher oil and gas prices. The European Central Bank left its deposit rate unchanged at 2.00% at its March meeting. European equities retraced early-year gains, particularly in cyclical and export-dependent sectors.
Japan’s economy in March 2026 remained under pressure from weak domestic momentum and sharply higher import costs, as the global oil shock intensified an already fragile recovery. The Bank of Japan held its short-term policy rate at 0.75% in March, maintaining an accommodative stance while signalling a clear tightening bias.
South African Market Overview
March was a particularly difficult month for South African assets, dominated by the dual headwinds of commodity price reversals and a weaker Rand.
The FTSE/JSE All Share Index returned -10.45% in ZAR for the month, bringing year-to-date returns to -0.61%. SA Listed Property declined -11.41% in ZAR for March, taking the year-to-date return to -4.92%. South African bonds, as measured by the FTSE/JSE All Bond Index, returned -6.83% in ZAR for the month, with year-to-date returns deteriorating to -3.36%. Cash remained the only positive performer, with the STeFI Composite returning +0.56% for the month and +1.66% year to date.
As mentioned before, the outbreak of conflict in the Middle East delivered a sharp supply shock that sent oil prices soaring above $100 per barrel and jolted global markets. South Africa, as an oil importer, will feel the pinch: the SARB forecasts fuel inflation to spike above 18% YoY in Q2, threatening to lift headline inflation from February’s 3% to around 4% in the coming months. Notably, February CPI had eased to 3% YoY, right at the SARB’s new 3% inflation target, thanks to prior declines in fuel and food costs. However, March’s oil shock reversed the disinflationary trend and prompted upward revisions to the SARB’s inflation forecast.
The SARB’s Monetary Policy Committee kept the repo rate unchanged at 6.75% during its March meeting. Governor Lesetja Kganyago underscored a “cautious” approach amid heightened global uncertainties. The decision was unanimous, marking a second consecutive hold following late-2024 rate cuts. Policymakers acknowledged improved domestic fundamentals — Q4 2025 GDP growth surprised to +1.1% for full-year 2025 and the National Budget signalled a “fiscal turning point” — but warned that a prolonged conflict could derail growth and ignite second-round inflation pressures.
The Rand depreciated sharply in March, with USD/ZAR spiking to R17.24 per USD at one point before settling around R16.94, about 6% weaker than end-February. Risk-off sentiment sparked broad equity sell-offs, making March the JSE’s worst month since 2008. Resource stocks were especially hard hit as precious metals prices collapsed — a dramatic reversal from February’s rally. By end-March, gold was down 11.5% and platinum down 17.5% month-on-month. This triggered a 21.7% decline in the precious metals and mining index. The bond market saw increased volatility with the local 10-year yield spiking 119 basis points higher, reflecting investor concerns about inflation and potential delays to monetary easing.
Sasol (+55.10%) led JSE gains in March, riding a perfect storm of geopolitical and currency moves — the escalation of the Middle East conflict pushed Brent crude above $100/bbl, while Rand weakness boosted the Dollar-denominated earnings of South Africa’s petrochemical heavyweight. Glencore (+11.78%) was the second-best performer. In contrast, Shoprite (+4.26%) and British American Tobacco (-0.39%) demonstrated their defensive characteristics amid broad market weakness.
The worst-performing shares in March were dominated by the precious metals miners, with Impala Platinum (-32.4%), Harmony Gold (-28.7%), Sibanye Stillwater (-27.1%), Valterra Platinum (-24.9%), and Northam Platinum (-21.5%) all posting heavy losses. Gold fell 11.6% as the Dollar attracted the bulk of safe-haven flows, while platinum plunged 17.5%, weighed not only by broader risk-off sentiment but also by its industrial exposure.
In summary, the outbreak of conflict in the Middle East was the dominant market-moving event of March, delivering a sharp supply shock that reset inflation expectations, shifted central bank guidance more cautiously, pressured equity markets globally, and strengthened the US Dollar on safe-haven demand.
Key Insights from Weekly Investment Team Meetings
The early March investment committee meetings identified the geopolitical shock immediately. The outbreak of conflict in the Middle East and its implications for oil prices, shipping rates and global risk appetite were the central focus from the opening session of the month.
- The Middle East conflict was the defining macro event of March. Oil prices surged above $100 per barrel, delivering a sharp supply shock that reset inflation expectations across all major economies and prompted central banks to shift guidance more cautiously.
- South African assets bore the brunt of the reversal. The JSE All Share declined -10.45% in ZAR for the month — its worst monthly performance since 2008 — driven by the collapse in precious metals prices, Rand weakness and sharply higher bond yields.
- The investment team progressively reduced risk through the month. Global equity exposure was cut meaningfully, US equity was reduced further below neutral, and defensive positioning in short-duration US Treasuries and USD TIPS was increased. Local equity beta was also reduced.
- Commodity exposure was increased as a portfolio hedge. The team increased spot commodity exposure and added to Global Energy ETF positions, reflecting the view that the energy complex warranted dedicated hedging given the supply shock environment.
- Bond volatility increased sharply. US 10-year Treasury yields surged intramonth to 4.46%, and SA’s 10-year yield spiked 119 basis points. This reinforced the case for shorter duration and inflation-linked exposure rather than outright bond risk.
- The SARB held rates and signalled caution. While domestic fundamentals had improved — including a stronger fiscal narrative and GDP growth of +1.1% for full-year 2025 — the inflation upside from energy prices constrained the SARB’s ability to signal further easing.
Portfolio Performance and Strategy
The investment team made a series of deliberate portfolio adjustments through March as the risk environment deteriorated. As at 3 March, offshore portfolios were underweight US equities with overweights in non-US equity and commodities. Following the escalation of the Iran conflict the team moved quickly to further reduce risk.
By 10 March, global equity had been reduced further, with the S&P 500, equal-weight S&P 500, non-US international equity ETFs and Gold Equity ETF all trimmed. Short-duration US Treasuries (0-1yr) were purchased as a defensive positioning measure, and commodity exposure was increased through a Gold Bullion ETF addition. Further adjustments were made during the month reflecting a preference for more defensive real asset exposure.
In local funds, SA equity beta was further reduced by 2%. Commodity exposure was increased and a small addition was made to Global Energy ETF, reflecting the team’s view that the energy shock warranted dedicated hedging in the commodity space.
The overall positioning through March reflected a deliberate shift from broad equity risk toward more defensive holdings — shorter-duration fixed income, inflation protection, cash and commodities. Diversification across asset classes and regions continued to provide the framework within which these tactical adjustments were made.
Source of all data: Morningstar, unless otherwise stated.
Jacques de Kock
Quantitative Analyst & Portfolio Manager
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