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David Aujla narration:

Disclosures (not being read, only showing up on screen):

Hello and welcome to the March edition of Inside the Markets.

A deeper look at how global markets have been navigating what has already become a challenging start to the year.

My name is David Aujla and I'm the Lead Portfolio Manager for Invesco Summit and Managed Multi-Asset fund ranges and its model portfolio service. 

January already hinted that this year would not be quiet, and March has quite frankly just confirmed that. Developments around Iran and a sharp move in energy prices set the tone for markets.

For much of the month, investors had to digest very real disruption risks in the Middle East, including threats to shipping through the Straits of Hormuz and damage to regional energy infrastructure. Oil prices jumped dramatically at one stage ranking amongst the largest monthly gains seen in quite some time. That surge fed directly into renewed worries about inflation and global economic growth.

Those twin concerns of higher energy-driven inflation and the prospect of slower activity pushed markets back towards a more stagflation-flavoured narrative. Central banks did not abandon the idea that policy rates had peaked, but they were more cautious about how quickly any rate cuts might begin, stressing that future decisions remain heavily dependent on incoming data.

So what did this mean for asset prices? March proved to be a tough month across most major markets. Global equities fell noticeably, with Europe and Asia leading declines after strong gains earlier in the year, while the US also finished in negative territory. 

The UK was something of an exception in relative terms. Although not immune to volatility, the FTSE 100’s heavier exposure to energy and mining companies meant it held up better than most other developed markets.

Bond markets also struggled. Government bond yields moved higher as markets marked down expectations for rapid rate cuts and reassessed near-term inflation risks. Corporate bond markets weakened too as credit spreads widened alongside a drop in risk appetite and ongoing worries about global growth.

One of the most notable moves came from gold. Despite the geopolitical backdrop, gold suffered one of its worst months since the global financial crisis. Prices fell sharply as leveraged positions were cut and some investors chose to realise previous gains, highlighting how so-called safe haven assets can behave unpredictably when positioning is stretched.

Across commodities more broadly, strength was concentrated in energy markets. Crude oil and related assets rallied amid supply and transport concerns, while industrial metals and agricultural commodities were more mixed, caught between supply constraints and a weaker growth outlook. 

By the end of the first quarter, global equity indices were slightly down for 2026 in local currency terms, having largely unwound the positive start to the year. Value stocks outperformed growth, and large caps generally beat small caps, a pattern consistent with a high-inflation, high-rate environment and investors’ preference for resilience and liquidity.

In fixed income markets, higher starting yields meant some bond indices remained close to break-even once income was included, although the journey was bumpy. For gold, losses in March eroded earlier gains, leaving prices close to flat for the quarter overall.

Looking ahead, several factors are in focus. Developments around Iran and the implications for energy markets remain critical. Recent reports of a temporary ceasefire framework have provided some relief, but the situation remains fragile and far from fully resolved. Oil prices will continue to be shaped by both inflation expectations and growth sentiment.

Central bank reactions are also key. If energy-driven inflation pressures ease and growth softens, policymakers may feel more comfortable easing later in the year. However, persistently high oil prices could lead them to hold policy steady for longer or proceed more cautiously than markets initially anticipated at the start of 2026. 

Another area to watch is whether market leadership continues to broaden beyond a narrow group of large-cap growth and artificial intelligence-led stocks. March’s sell-off triggered rotation towards value-oriented, cash-generative and energy-exposed areas of the market, with large caps again outperforming small caps. Whether this trend persists or reverses will shape returns going forward.

Finally, March reinforced the importance of diversification. It was a month in which equities, most bond markets and even gold struggled simultaneously, while energy and cash held their ground. Exposure to genuinely diverse sources of risk and return remains essential in a world where macroeconomic policy and geopolitics can shift rapidly.

Thank you for taking the time to read this month’s review. I hope you found it useful, and as always, please do get in touch with any questions.

Investment risks

The value of investments and any income will fluctuate (this may partly be the result of exchange rate fluctuations) and investors may not get back the full amount invested.

Important information

Data as at 31 March 2026

This is marketing material and not financial advice. It is not intended as a recommendation to buy or sell any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication.

Views and opinions are based on current market conditions and are subject to change.