Market headlines
Geopolitics dominated market direction
Financial markets were driven by fast moving geopolitical developments, with policy and macro data repeatedly taking a back seat to headline risk and shifts in sentiment.
Energy prices reflected rising risk premiums
Oil markets became the clearest transmission channel for geopolitical concerns, with prices moving higher on fears of supply disruption and feeding into broader inflation expectations.
Central banks signalled patience, not urgency
Global central banks emphasised the need for greater confidence on inflation, prompting markets to scale back expectations for quicker policy easing.
Growth optimism softened without collapsing
Signs of uneven economic momentum tested the soft landing narrative, reinforcing a cautious but selective approach to risk rather than a full retreat from growth assets.
The big topics
Energy Shock as the Dominant Market Driver
March was defined by a sharp repricing of energy risk, as escalating tensions in the Middle East pushed oil prices significantly higher and injected renewed volatility across markets.
Persistent concerns around supply disruptions, particularly through key shipping routes and energy infrastructure, kept oil prices elevated and highly sensitive to headlines. For investors, the importance of energy was less about day-to-day price fluctuations and more about the broader implications for inflation and growth.
Higher oil prices fed quickly into bond markets, with yields rising as investors reassessed the risk that inflation pressures could re-emerge just as economic momentum shows signs of cooling.
Geopolitical Headlines Drive Fragile and Fast-Moving Sentiment
Geopolitics was the primary catalyst for market swings, with sentiment shifting rapidly between hopes of de-escalation and fears of prolonged conflict.
Temporary periods of relief (often sparked by diplomatic signals or pauses in military action) were repeatedly followed by renewed anxiety as fresh threats or attacks emerged. This created a whipsaw environment in which risk appetite proved fragile and short-lived.
Equity markets struggled to find a stable footing, particularly in regions more exposed to energy costs, and volatility remained elevated. The month underscored how quickly confidence can be undermined when geopolitical developments remain fluid and outcomes difficult to predict.
Inflation Risks Complicate an Already Moderating Growth Backdrop
The renewed rise in energy prices has landed at a delicate point for global growth.
Recent data had already been signalling a gradual slowing of momentum, with softer business surveys, cooling labour markets and more cautious consumer behaviour across major economies. Higher fuel and transport costs risk compounding these pressures by eroding household purchasing power and squeezing corporate margins, particularly in energy intensive sectors, while also weighing on business and consumer confidence.
Taken together, the energy shock raises the risk that growth slows more sharply than previously expected, even if outright recession remains a low-probability scenario for now.
Central Banks Turn More Cautious as Policy Trade-Offs Intensify
Against this backdrop, central banks struck a notably more vigilant tone.
While major central banks left policy rates unchanged, communication emphasised growing sensitivity to inflation risks stemming from higher energy prices. This shift reinforced a sense that rate cuts, while still possible, may arrive more slowly and cautiously than previously hoped. Bond yields moved higher as markets adjusted to a ‘higher for longer’ narrative, adding pressure to rate-sensitive assets.
With policymakers balancing slowing growth against renewed inflation risks, the month highlighted why discipline, diversification and a longer-term perspective remain essential in navigating a challenging and headline-driven environment.
Important information
The information in this article does not constitute advice or a recommendation and investment decisions should not be made on the basis of it. This article is for the information of the recipient only and should not be reproduced, copied or made available to others. The price of investments and the income from them may go down as well as up and neither is guaranteed. Investors may not get back the capital they invested. Past performance is not a reliable indicator of future results.
Brooks Macdonald is a trading name of Brooks Macdonald Group plc used by various companies in the Brooks Macdonald group of companies. Brooks Macdonald Group plc is registered in England No: 04402058. Registered office: 40 Leadenhall Street, London EC3A 2BJ. Brooks Macdonald Asset Management Limited is regulated by the Financial Conduct Authority. Registered in England No: 03417519. Registered office: 40 Leadenhall Street, London, EC3A 2BJ. Brooks Macdonald is a trading name of Brooks Macdonald Group plc used by various companies in the Brooks Macdonald group of companies.
Brooks Macdonald Group plc is registered in England No 04402058. Registered office: 40 Leadenhall Street, London, EC3A 2BJ.