March 2026: in the eye of the storm

Financial markets were dominated by the conflict in the Middle East in March. Equity prices fell and interest rates rose, but as January and February had shown the opposite trend, price movements measured over the full first quarter of 2026 remained limited.

Equities, bonds and real estate all delivered negative returns in March. The cause was clear: the attack by the United States and Israel on Iran on 28 February and the subsequent escalation of hostilities in the Middle East. Sharply higher oil and gas prices fuelled inflation concerns and, as a result, pushed up interest rates on capital markets. European government bonds therefore posted a negative return of 2.7% in March. Higher interest rates are, in principle, also unfavourable for corporate bonds, but the impact remained relatively limited, with monthly returns of -2.3% for European investment-grade corporate bonds and -2.5% for higher-risk high-yield bonds.

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