Disclosure: This article is posted to inform readers and not to provide financial advice.
Introduction
A calm, confident start to the year, then a sharp jolt in March. Here is what shaped the first quarter of 2026, and what it means for the long-term investor.
Every quarter, our team at TVC unpacks what happened in The Markets, globally and locally, in plain language, so you can make sense of the headlines without getting lost in them. The first quarter of 2026 was, in many ways, a tale of two halves: a confident start followed by a sharp jolt in March. Here is what moved things, and what it means going forward.
Every quarter, our team at TVC unpacks what happened in The Markets, globally and locally, in plain language, so you can make sense of the headlines without getting lost in them. The first quarter of 2026 was, in many ways, a tale of two halves: a confident start followed by a sharp jolt in March. Here is what moved things, and what it means going forward.
A Quarter Of Two Halves
January and February felt like a continuation of 2025. Emerging markets were leading, markets outside the United States were quietly outperforming, and South African bonds and equities held onto their gains. The mood was constructive. The rand was trading at around R16 to the dollar, and the general expectation was that interest rates would gradually come down through the year.
Then, at the end of February, conflict in the Middle East, involving Iran, the United States and Israel, escalated sharply. That single development reshaped the entire quarter.
Then, at the end of February, conflict in the Middle East, involving Iran, the United States and Israel, escalated sharply. That single development reshaped the entire quarter.
The Oil Shock And Its Ripple Effects
The most immediate consequence was the oil price. Brent crude, which had spent most of 2025 trading between $60 and $80 a barrel, surged towards roughly $120 in March before easing back to around $100 by mid-April. A large share of the world’s oil moves through the Strait of Hormuz, so any threat to that route feeds through to energy prices very quickly.
Higher oil prices act like a tax on the global economy. They push up the cost of fuel and transport, squeeze company profit margins, and stoke inflation. The knock-on effect was that central banks, which markets had expected to keep cutting interest rates, suddenly looked far more likely to hold, or in some cases even raise. Expectations for rate cuts largely evaporated, both abroad and here at home.
The result was a broad March sell-off. When fear takes over, good assets tend to fall alongside weaker ones, and that is exactly what played out: locally, South African bonds dropped close to 7% in the month and listed property fell around 11%, while resources, the standout sector of 2025, gave back a meaningful chunk of their gains. Globally, most major markets were in the red, with expensive US technology shares hit hardest as questions resurfaced about how artificial intelligence might disrupt their business models.
Higher oil prices act like a tax on the global economy. They push up the cost of fuel and transport, squeeze company profit margins, and stoke inflation. The knock-on effect was that central banks, which markets had expected to keep cutting interest rates, suddenly looked far more likely to hold, or in some cases even raise. Expectations for rate cuts largely evaporated, both abroad and here at home.
The result was a broad March sell-off. When fear takes over, good assets tend to fall alongside weaker ones, and that is exactly what played out: locally, South African bonds dropped close to 7% in the month and listed property fell around 11%, while resources, the standout sector of 2025, gave back a meaningful chunk of their gains. Globally, most major markets were in the red, with expensive US technology shares hit hardest as questions resurfaced about how artificial intelligence might disrupt their business models.
Why The Full-Quarter Picture Matters More
Here is the important part. While March looked alarming in isolation, the full quarter told a far more measured story, and the one-year view told a genuinely encouraging one.
Despite the March wobble, South African equities were still up roughly 34% over the prior year, local bonds around 20%, and property close to 30%. Emerging markets were the quarter’s standout, outperforming both developed markets and the US, helped along by commodity exporters like Brazil that benefited from the very oil spike that hurt importers like South Africa.
A frightening month is not the same as a poor year, and reacting to one is often the surest way to undermine the other.
Despite the March wobble, South African equities were still up roughly 34% over the prior year, local bonds around 20%, and property close to 30%. Emerging markets were the quarter’s standout, outperforming both developed markets and the US, helped along by commodity exporters like Brazil that benefited from the very oil spike that hurt importers like South Africa.
A frightening month is not the same as a poor year, and reacting to one is often the surest way to undermine the other.
Diversification Did Its Job
If there was one clear winner in Q1, it was diversification. The spread between the best- and worst-performing parts of the global market was enormous, emerging markets and value shares held up well, while concentrated bets on US mega-cap technology suffered most. Investors who spread their exposure across regions, asset classes and styles were materially better protected than those who had crowded into the popular names.
The same principle showed up in more defensive strategies, which are deliberately built to lose less when markets fall. Capturing less of the downside means compounding from a higher base when markets recover, and over time, that asymmetry matters enormously.
The same principle showed up in more defensive strategies, which are deliberately built to lose less when markets fall. Capturing less of the downside means compounding from a higher base when markets recover, and over time, that asymmetry matters enormously.
Looking Ahead
The honest answer is that nobody knows precisely when the conflict will resolve. The prevailing view among the managers we follow is a “messy” resolution over a number of weeks rather than a clean or rapid one, meaning markets are likely to stay choppy for a while yet, with a risk premium attached to oil and geopolitics.
But there are genuine grounds for optimism. Underlying global growth has remained reasonably resilient, employment has held up, and crucially, the sell-off has actually made both equities and bonds better value than they were a few months ago. At present, markets appear to be treating the disruption as a temporary inflation shock rather than a lasting growth shock. The key variable from here is simply how long the conflict lasts.
But there are genuine grounds for optimism. Underlying global growth has remained reasonably resilient, employment has held up, and crucially, the sell-off has actually made both equities and bonds better value than they were a few months ago. At present, markets appear to be treating the disruption as a temporary inflation shock rather than a lasting growth shock. The key variable from here is simply how long the conflict lasts.
The Long Game, As Always
Quarters like this one are precisely why we favour patience over prediction. Trying to time The Markets, jumping out during the fear and back in during the calm, is a strategy that rarely pays off, because the recovery often arrives faster and more forcefully than anyone expects. A well-diversified portfolio, aligned to your personal goals and time horizon, remains the most reliable way to navigate uncertainty.
If you would like to discuss how recent events affect your own plan, our Certified Financial Planners® at TVC are always here to help you keep the long game in focus.
If you would like to discuss how recent events affect your own plan, our Certified Financial Planners® at TVC are always here to help you keep the long game in focus.
