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The first quarter of 2026 was defined by heightened geopolitical tensions in the Middle East, escalating fears of stagflation, and mounting uncertainty over AI disruption. Against this backdrop, global equities broadly declined, with the MSCI World Index retreating 3.6% in USD terms.i The war in Iran led to the effective closure of the Strait of Hormuz, jeopardizing 20% of the global daily oil supply and triggering the largest single-quarter price spike for Brent crude in decades. Fixed income markets subsequently came under pressure as surging energy prices drove inflation expectations higher, fueling speculation that central banks might be forced into more restrictive policies. As volatility spiked in March, even assets often perceived as hedges, including gold, Bitcoin, and segments of private markets, failed to defend portfolios. The US dollar was a notable bright spot, climbing 1.7% on a trade-weighted basis, bolstered by its “safe haven” status amid heightened global instability.
