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Market Commentary – Quarter ended 31 March 2026
2026 has so far unfolded in two distinct phases: the first, a promising start for investors; and the second, a period defined by geopolitical tensions in the Middle East.
Turning the clock back to the beginning of the year, and supportive economic data underpinned a rewarding January and February for stock markets, offsetting fast-moving events in Venezuela, Iran (more on which later) as well as a dispute over the future of Greenland. Diverse segments of the global index saw strong returns: the UK’s large exposure to defence and mining stocks proved a tailwind; Japanese stocks reflected a positive reaction to the Liberal Democratic Party’s resounding win; and emerging market equities benefited from growing artificial intelligence (“AI”) investment. Indeed, the sharp rise of over 10% (all returns total and in sterling, unless otherwise stated) from each of these indices over the first two months of 2026 was symptomatic of a continued “broadening” of market returns away from large US “growth” stocks. UK government bonds (“gilts”) also returned 2.5% in February, boosted by encouraging inflation data, while commercial property and hedge fund allocations started the year positively with low to mid-single digit gains.
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