Portfolio Update March 2026
Major Indicators
Key Market Drivers
The war between the US, Israel and Iran dominated global markets across the week. Oil prices spiked as missile and drone attacks saw tanker traffic grind to a standstill in the Strait of Hormuz, a crucial shipping lane for around one-fifth of the world's crude. Equity markets trended lower on concerns that a sharp rise in energy prices will place further upward pressure on inflation, extinguishing the rebound in global economic growth.
Much appears to hinge on the expected duration of this conflict, or more specifically the disruption to global oil supplies. The economic impact of a temporary spike in oil prices is likely to be limited. However, news reports of Gulf energy exporters curtailing production as storage facilities fill, and fears that more prolonged disruption could drive oil as high as US$150/bbl, have sparked some fear of a global stagflation scenario.
US fixed interest markets have responded to this inflationary uncertainty by removing one rate cut from 2026, and pushing back expected timing for the next Federal Reserve easing by a couple of months (to September). US 10-year yields have risen to 4.2% from 4.0% a week ago. In Europe, futures markets have switched bets to a hike from a cut in the ECB rate in the next 12 months.
Inflationary implications of a spike in oil prices give the RBA something further to consider when it next meets on 16-17 March. The tone from Governor Bullock during a Q&A session this week was somewhat hawkish, flagging the March meeting as very much ‘live’, emphasising high current inflation and a tight labour market, and also indicating that it was harder to look through the oil supply shock when inflation is already high.
Domestic GDP increased 0.8% quarter-on-quarter in Q4, in line with expectations. Year-on-year growth of 2.6% was the strongest since early 2023. Household consumption rose 0.3% qoq, which was weaker than expected, offset by a solid rise in business investment. There was a pleasing lift in productivity.
Stocks in the News — S&P/ASX 200
Major Share Price Moves — Infinity portfolio plus
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