As March progressed, financial markets were increasingly shaped by geopolitical tensions rather than economic fundamentals. The escalation of the conflict in the Middle East, and in particular the closure of the Strait of Hormuz, triggered sharp rises in oil and gas prices and led to heightened inflation concerns. This weighed on both equity and bond markets, resulting in broad-based declines across regions, while traditional safe havens offered little protection. Against this backdrop of elevated uncertainty and rising volatility, we adopted a more cautious stance, reducing our equity allocation to neutral and prioritising flexibility as markets navigate the balance between geopolitical risk, inflation pressures and slowing growth momentum.

Highlights this month:

• War in the Middle East: markets caught between hope and fear
• Inflation fears push up bond yields
• Equity allocation reduced to neutral as a precaution