March 2026 Market Report: The Iran War and its Impact on Financial Markets

I hope this message finds you well. As the geopolitical landscape shifts dramatically, I’d like to share our latest March 2026 Market Report covering the economic and market implications of the ongoing war in Iran.

Click on the video below to watch.

Key Highlights from the March 2026 Market Report:

U.S. Economy Weakening

• February: U.S. economy lost 92,000 jobs (expectations: +55,000)
• Unemployment rate: 4.4%, weaker than expectations of a 4.3% unemployment rate
• Q4 2025 GDP growth revised to +0.7% from initial +1.7% estimate
• New home sales fell to a 3.5 year low

Inflation to Rise due to Energy Shock

• February inflation: +2.4% annual rate
• Gasoline prices jumped $1 per gallon since the outbreak of war with Iran
• Future inflation reports expected to be much higher
• 10-year Treasury yield spiked from below 4% to approaching 4.5%

Fed Policy Shift

• Pre-war expectation: two rate cuts in 2026
• Post-war expectation: potentially one rate hike in 2026
• Higher energy prices feeding through to broader inflation
• Rising interest rates impacting home and auto purchases

U.S. Stocks in Correction

• Markets flat through February, then fell on the outbreak of war with Iran
• S&P 500 Index now below 200-day moving average
• Energy sector up +33% year to date and up +7% in March alone
• Technology down -7%, Financials down -10% year to date
• Good corporate news overshadowed by war and inflation concerns

Global Markets Diverge by Region

• Energy exporters outperforming: Norway, Brazil, Peru
• AI-linked markets strong: South Korea, Taiwan
• Energy importers struggling: India, Germany, European markets
• Precious metals weak as rising interest rates pressure gold and silver prices
• South Africa down sharply on precious metals exposure

War in Iran Disrupts Global Energy

• Strait of Hormuz effectively closed
• Major damage to energy infrastructure in Saudi Arabia, Kuwait, UAE, Qatar
• 38% of all seaborne crude oil passes through Strait of Hormuz
• 29% of liquefied petroleum, 20% of refined oil products affected
• Philippines and other nations implementing energy rationing
• Peace negotiations show no overlap between U.S. and Iran demands

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Our Perspective

The war in Iran has fundamentally shifted the market landscape. The closure of the Strait of Hormuz, through which 38% of global seaborne crude passes, combined with infrastructure damage across Gulf nations, has created an energy shock affecting all consumers globally.

U.S. economic data shows clear weakness: 92,000 jobs lost in February, Q4 GDP revised down to +0.7% growth, and new home sales at 3.5 year lows. Yet the Fed may be forced to raise rates rather than cut due to energy-driven inflation, with gasoline prices jumping $1 per gallon in weeks.

U.S. stocks have entered correction territory, falling below the 200-day moving average, with only the energy sector generating strong returns (+33% year-to-date). Global markets show stark divergence: energy exporters and AI-linked economies outperforming while energy importers struggle. The market will likely rally once the end of the Iran conflict becomes clear, but significant uncertainty remains around timing, given the wide gap between U.S. and Iranian negotiating positions.

I encourage you to watch the full video for a comprehensive discussion of these developments. As always, please reach out if you’d like to review your portfolio positioning given current conditions.

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