March was a rough month for global markets.

Escalating conflict in the Middle East pushed oil and gas prices sharply higher, which added fresh inflation worries just as many investors were hoping things were starting to settle down. Sharemarkets fell across several regions, bond markets came under pressure, and central banks were left with more inflation woes.

For Kiwi investors, March was a reminder that geopolitics still matter - especially when they affect energy prices, inflation and interest rates.

March 2026 markets at a glance:

• Oil prices jumped sharply as conflict in the Middle East intensified
• Inflation concerns picked up again as energy costs rose
• Global sharemarkets fell, with Europe and Japan hit particularly hard
• Bond markets also weakened as hopes for rate cuts diminished
• New Zealand shares fell nearly 6% during the month

Why energy prices mattered so much in March

The big market story in March was focused around energy. Brent crude oil rose to nearly US$120 a barrel, its highest level since 2022 (when the Russia-Ukraine war started). Strategic oil reserve releases from G7 countries helped a little, but not enough to calm markets. Damage to Qatar’s Ras Laffan LNG terminal added to concerns, especially given how important it is to global gas supply.

Higher oil and gas prices matter because they tend to push up costs right across the economy. Fuel gets more expensive. Transport costs rise. Businesses pay more to operate. And eventually, households can feel it too. And that's why investors started worrying again about inflation staying higher for longer.

Inflation and interest rates: not the direction markets wanted

At the very start of the year, many investors were still hoping central banks might have room to cut interest rates later in 2026. March made that look less likely.

When energy prices rise, inflation can become harder to bring under control. That puts central banks in a tough spot. They want to support growth, but they also do not want inflation flaring up again. So instead of asking when rate cuts might arrive, markets started asking whether some central banks might need to stay higher for longer - or even tighten again if inflation proves stubborn.

That shift hurt both shares and bonds around the globe during the month.

United States: more insulated, but still under pressure

The US is less exposed to energy shocks than many other countries, because it produces a lot of its own energy. Canada is in a similar position, and in some ways can even benefit from higher oil prices. But that did not stop investors from getting nervous.

The US S&P 500 fell 5% in March as rising energy costs, inflation worries and weaker sentiment weighed on US markets. In terms of US bond markets, the US 10-year Treasury yields also jumped from around 4.0% to 4.5% before settling closer to 4.3% by the end of the month.

This rise in yields pushed bond prices down, which is the usual pattern when markets think interest rates may stay higher for longer.

Europe and the UK: energy worries return

Europe was hit pretty hard in March. The region is still more exposed to energy price shocks than the US, and this month brought back some uncomfortable memories from earlier disruptions tied to the war in Ukraine. Alternative gas supply from Norway and the US may help, but higher prices are still a drag on households and businesses. European shares fell around 8% during the month.

In the UK, the backdrop remains mixed. Economic growth is weak, inflation is still proving sticky, and the Bank of England has little room to relax if energy-driven price pressures stick around.

Asia: Japan hit hard, China more insulated

Continuing the doom and gloom market trend, Japan also had a particularly difficult month. Because Japan relies heavily on imported energy, and much of that supply passes through the Strait of Hormuz, rising conflict in the Middle East hit confidence quickly. Japanese shares fell 10% in March, giving back some of the strong gains seen earlier in the year.

China looks a bit better placed in comparison. Large strategic reserves and continued Russian oil imports have helped reduce some of the energy pressure. Even so, China’s growth outlook remains softer than many investors had once hoped - a trend we've continued to see for a while now.

Across the broader developing world (which includes much of Asia), the MSCI Emerging Markets Index fell 9.2% (in NZD terms) in March.

Australia and New Zealand: closer to home

In Australia, the Reserve Bank (RBA) lifted rates to 4.10% as inflation concerns picked up again. More hikes are not guaranteed, but markets are clearly feeling more cautious now.

In New Zealand, inflation is expected to rise to around 4% before easing back toward the Reserve Bank’s (RBNZ) 1% to 3% target range. That means the possibility of more rate pressure later this year has not gone away - in fact many media commentators are warning of bigger hikes, sooner. But as we know, these things are never easily predictable.

The NZ sharemarket fell nearly 6% in March, following its global counterparts in a downward trend thanks to sustained global economic pressures. Local bonds also fell, but held up a little better than global bonds hedged to NZD. That's not exactly cause for celebration, but in a month like March, “less bad” still counts for something!

What this could mean for investors

March was a good example of how quickly market expectations can change. Only a few months ago, investors were focused on whether inflation was finally under control and when rate cuts might arrive. Now the conversation has shifted back to energy prices, geopolitical risk, and whether inflation could stay sticky for longer. That does not mean markets will keep falling from here. These things can reverse quickly, especially if tensions ease. But it does mean uncertainty is back in the driver’s seat for now.

For long-term investors, the main lesson is the same as ever: short-term market moves can be sharp, uncomfortable and impossible to predict consistently. That's why both diversification and sticking to your investment timeframe still matter.

TL;DR - March 2026 summary

• Conflict in the Middle East pushed oil and gas prices sharply higher
• Higher energy prices brought inflation worries back into focus
• Hopes for interest rate cuts faded as markets reassessed the outlook
• The S&P 500 fell 5%, European shares fell around 8%, and Japanese shares fell 10%
• The NZ sharemarket fell nearly 6% during the month

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