A Noisy First Quarter: What Are the Real Results?

Investment markets reacted sharply to Donald Trump’s geopolitical “excursion” in Iran this March. However, when looking at the quarter as a whole, there was far less structural change than the sensationalist headlines might have led you to believe.

Q1 2026 Index Performance Summary

A Strong Start Interrupted by Conflict

2025 was generally a positive year for investment markets. The UK delivered a notably robust performance, with the FTSE 100 rising by more than a fifth over the year, outperforming both Europe and the US in local currency terms.

The beginning of 2026 initially followed this trajectory. Investors operated under the expectation that interest rates would continue to drift downward globally and that inflation remained a manageable concern. By Friday, 27 February, most markets had climbed well above their 2025 closing levels. Japan emerged as the standout performer during this period, fueled by the snap election success of Prime Minister Sanae Takaichi.

However, the narrative shifted abruptly on 28 February with the commencement of the US-Israel conflict with Iran.

The “Armada” and the Impact of War

For several months, the US had been assembling what Donald Trump described as “an armada” in the waters surrounding Iran. While this buildup had already nudged oil prices to just over $70 a barrel, the actual timing of the attack caught the world off guard.

When trading resumed on Monday, 2 March, the unease was palpable. The remainder of the month saw markets on a largely downward trajectory, occasionally interrupted by brief rallies whenever it seemed a diplomatic shift might occur. By the end of March, with oil surging past $100 a barrel, a swift resolution appeared increasingly unlikely.

Looking Past the “Short-Term Cacophony”

When you step back and evaluate the quarter in its entirety, the picture is more nuanced than the March volatility suggests:

• Equity Market Resilience: While equities stumbled in March, these losses were largely offset by the gains made in January and February. For investors who only review their valuations quarterly, the “excitement” of the last three months may barely be visible.

• Gold’s Volatility: Gold, traditionally viewed as a safe haven, proved to be surprisingly volatile. While its dollar price dropped by 10.3% in March alone, it still managed a 7.7% gain over the full quarter.

• The Bond Market and Inflation: Perhaps the most significant impact was felt in government bonds. As oil prices rose, so did inflation fears—the natural enemy of bond investors. The UK gilts market was hit particularly hard, a concerning development for a government planning to borrow over £250 billion in the 2026/27 cycle.

The first quarter of 2026 has provided plenty of noise, serving as a stark reminder that the short-term sounds of the market can often be deafening without necessarily changing the long-term outlook.

Secure Your Financial Future with Chartwell Wealth Management

In times of geopolitical uncertainty and market “noise,” having a clear, long-term strategy is more important than ever. At Chartwell Wealth Management, we help our clients look past the daily headlines to focus on their ultimate financial goals. Whether you are concerned about the impact of rising oil prices on your portfolio or looking to rebalance after a volatile quarter, our expert team is here to provide clarity and professional guidance.

Contact Chartwell Wealth Management today to discuss your investment strategy and ensure your portfolio is positioned for the road ahead.

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investing in shares should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances.