Global markets experienced their sharpest monthly decline in three years following coordinated military strikes by the United States (US) and Israel on Iran. Markets viewed the action as politically motivated rather than strategically essential and Iran’s swift retaliation in temporarily closing the Strait of Hormuz triggered the largest oil supply disruption in recent history.

Risk premia surged as geopolitical uncertainty escalated, resulting in a significant repricing across asset classes. Brent crude, which had traded near US$67 per barrel amid balanced supply–demand conditions, spiked to an intraday high of US$129 per barrel, ending March at US$118 per barrel. The consequent energy shock led to downward revisions in global growth forecasts, renewed inflation concerns and a deferral of expected central‑bank rate cuts.

United States

US equity indices entered correction territory, closing sharply lower despite a late‑month rebound as rhetoric suggested the conflict might soon ease. Performance for March:

• Dow Jones: –5.4%
• S&P 500: –5.1%
• Nasdaq: –4.8%

Economic data was mixed.

• Headline inflation (February): 2.4% Year-over-Year (YoY) (unchanged)
• Core inflation (February): 2.5% YoY (unchanged)
• Q4 2025 Gross Domestic Product (GDP): revised down to 0.7% from 1.4%
• Personal Consumption Expenditure (PCE) inflation (January): rose to 3.1% from 3.0%

The Federal Reserve held rates steady at its March meeting, noting the heightened uncertainty surrounding the Iran conflict and its potential economic spillovers.

United Kingdom

The UK displayed relative resilience compared with continental Europe, partly due to the significant energy exposure in the Financial Times Stock Exchange (FTSE) 100 Index, which cushioned market losses. The FTSE 100 fell 6.2% in March.

Economic indicators reflected stagnation:

• Q4 2025 GDP: +0.1% (unchanged from Q3)
• Headline inflation (February): 3.0% YoY (in line)
• Core inflation (February): 3.2% YoY, slightly above January’s 3.1%

Inflation remains above the Bank of England’s 2% target, reinforcing a cautious policy stance.

Eurozone

European markets suffered the steepest declines globally due to acute energy vulnerability.

• DAX: –10.3%
• CAC 40: –8.9%

Eurozone inflation surprised to the upside at 1.9% in February, compared to 1.7% in January, complicating expectations for monetary easing.

Asia

Asia delivered a mixed performance.

China

China displayed relative resilience, having reduced dependence on Middle Eastern oil through increased domestic renewables and Russian pipeline supply.

• Hang Seng: –6.9%
• Shanghai Composite: –6.5%
• Manufacturing Purchasing Managers' Index (PMI) (March): 50.4 (up from 49.0)
• Non‑manufacturing PMI (March): 50.1 (up from 49.5)
• Both indicators moved back into expansion territory

Japan

Japan experienced most of the oil shock given its heavy import reliance.

• Nikkei: –13.2% for March
• Inflation (February): 1.3% vs. 1.5% in January (below expectations)

The Bnnk of Japan held rates steady, but signalled openness to a possible hike in April.

South Africa

South African markets recorded their worst monthly performance in nearly 18 years, driven by falling precious‑metal prices, a weaker rand, prospects of rate hikes and global energy shocks.

• All‑Share Index: –11.2%
• Resources: –17.8%
• Property: –11.8%
• Financials: –10.3%
• Industrials: –9.3%

Top performers

Beneficiaries were energy producers and essential‑goods retailers:

• Sasol: +55%
• Thungela: +51%
• Exxaro: +13.6%
• Boxer: +6.2%
• Shoprite: +4.3%

Major underperformers

Gold and platinum miners led the declines:

• Impala: –32.4%
• Harmony: –28.7%
• Sibanye: –27.1%
• Wilson Bayly: –26.6%
• Foschini: –19.1%
• SA Corporate Real Estate: –18.3%

Local Economics

Inflation cooled ahead of the geopolitical shock:

• Headline inflation (February): 3.0% (from 3.5%)
• Core inflation (February): 3.0% (from 3.4%), the lowest since 2021

These prints aligned neatly with the South African Reserve Bank’s new 3% inflation target. However, the oil‑price surge introduces material upside risks. The Monetary Policy Committee maintained a cautious stance, keeping the repo rate at 6.75% and prime at 10.25%, signalling “higher for longer.”