March investment report: The latest view on global markets
Welcome to March’s edition of the True Potential Investment Report, where we look at recent developments across global markets and the broader economic environment, and what they could mean for investors.
Key themes at a glance:
- Global uncertainty rises: Conflict in the Middle East has disrupted the economic backdrop, with higher energy prices posing a renewed inflation risk. While these developments are concerning, we remain hopeful the impact will prove temporary.
- US growth remains supported: Investment in artificial intelligence, strong productivity and healthy corporate profits continue to underpin the US economy, even as the labour market shows signs of cooling.
- Europe faces renewed challenges: Higher energy prices threaten the region’s improving outlook, although increased German spending on infrastructure and defence continues to offer support.
- Valuations vary across regions: Many investors still favour US equities despite elevated valuations, partly reflecting other regions’ greater sensitivity to rising energy costs.
- A more cautious stance: We have moderated our outlook across asset classes, preferring equities outside the US and seeing value in UK gilts, while remaining mindful of political risks.
Global economic backdrop
The conflict in Iran has challenged our previous central view of a robust global economic environment. The rise in oil and gas prices risks unsettling what had been a relatively stable inflation backdrop, particularly for major energy‑importing regions such as Europe, the UK and parts of Asia.
A prolonged disruption to the Strait of Hormuz could increase inflationary pressures and weigh on risk assets globally. That said, our working assumption remains that the conflict will be short‑lived. Ongoing negotiations give us cause for optimism that energy prices could ease as tensions subside.
US outlook
In the US, inflation has been slowing. The labour market is cooling, however, and although the US is less vulnerable to disrupted energy supplies than many other regions, this will soon be felt in consumers’ pockets.
Looking ahead, policymakers may seek to address affordability concerns as November’s mid‑term elections approach. For now, however, the US economy continues to be supported by sustained investment in AI, strong productivity trends and solid corporate earnings.
European outlook
Europe is particularly vulnerable to rising energy prices, which could threaten the region’s gradual economic improvement. If higher energy costs feed back into inflation, consumer spending may weaken and interest rates could remain higher for longer, limiting economic momentum.
On the other hand, Europe’s economy should still be supported by increased German spending on infrastructure and defence.
Equities and valuations
Despite the recent sell‑off, equity valuations continue to adjust to the changing economic environment. There remain significant differences between regions and, in some cases, within markets themselves.
Investor sentiment towards US equities remains relatively resilient, even though valuations are elevated. In other markets, valuations are more attractive, but earnings look vulnerable to the effects of the Iran war.
Our positioning
In response to the current environment, we have adopted a more cautious stance across asset classes. Within equities, we continue to favour stocks listed outside the US, remaining focused on companies’ ability to generate earnings that justify their valuations.
In fixed income, UK gilts appear more attractive than US Treasuries, although political risks remain an important consideration. Elsewhere, careful selection remains essential, particularly if geopolitical tensions persist. Should the Middle East conflict become prolonged, the US dollar and selected commodity assets may offer greater resilience than other risk assets.
With investing, your capital is at risk. Investments can fluctuate in value and you may get back less than you invest.
This material is not a personal recommendation or financial advice and the investments referred to may not be suitable for all investors.
Opinions, interpretations and conclusions represent the views of True Potential Investments at the date of publication and are subject to change. Forecasts are not a reliable indicator of future results.
All data sourced from Bloomberg L.P. (31/03/2026)
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