Markets faced a shifting backdrop in March, with global tensions and economic data challenging assumptions about growth, inflation and rates.
April 7, 2026
Introduction
Global equity markets fell in March. Geopolitical tensions in the Middle East escalated, pushing up energy prices and raising concerns that high inflation will reemerge. Investors faced more uncertainty, which led to an exit from risk assets over the month. With the Strait of Hormuz effectively closed, oil prices rose by over 50%.
The Bank of Canada (BoC), U.S. Federal Reserve Board (Fed), Bank of England, European Central Bank and Bank of Japan also held their policy interest rates steady at their respective March meetings. All expressed caution that inflation could move higher in the coming months, so they are carefully analyzing how Middle East tensions are impacting prices and their domestic economies.
In Canada, the S&P/TSX Composite Index declined, hindered by weakness in the materials sector. U.S. equities also dropped. Yields on 10-year government bonds in Canada and the U.S. increased over the month on higher inflation expectations, which raised the possibility that central banks will be forced to raise interest rates this year. The price of gold declined over March.
