Market Update: March 31, 2026

Global markets closed the week reflecting a growing tension between resilient economic activity and rising geopolitical and inflation risks.

Recent data showed U.S. manufacturing activity improving modestly, while services softened slightly—both still in expansion territory. However, declining construction spending and weaker consumer sentiment point to early signs of demand fatigue. At the same time, inflation pressures are re-emerging, driven largely by higher energy costs.

Equity markets were mixed globally. U.S. large caps continued to pull back, with the Nasdaq entering correction territory (-10%) and the S&P 500 -8% from recent highs. In contrast, developed international markets—particularly Europe—posted gains. Sector performance reflected the macro backdrop: energy and materials outperformed, while technology and communication services lagged. Notably, small caps showed relative resilience.

Geopolitics remain the dominant market driver. Ongoing uncertainty around the U.S.-Iran conflict continues to flow directly through oil prices, which have become the market’s primary pressure valve. Crude prices remain elevated, pushing inflation expectations higher and contributing to a sharp rise in Treasury yields, with the 10-year approaching 4.5%. Markets appear to be pricing in a temporary disruption rather than a prolonged economic shock.

Fixed income struggled as yields climbed and rate cut expectations faded. Futures markets are no longer pricing in Fed easing this year, with some probability shifting toward further tightening if inflation persists.

Looking ahead, labor market data will be key, alongside continued geopolitical developments. While corrections of this magnitude are not uncommon historically, the path forward will likely hinge on energy stability and central bank response.

The information above has been obtained from sources considered reliable, but no representation is made as to its completeness, accuracy or timeliness.  All information and opinions expressed are subject to change without notice.  Information provided in this report is not intended to be, and should not be construed as, investment, legal or tax advice; and does not constitute an offer, or a solicitation of any offer, to buy or sell any security, investment or other product.