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Global equity markets were largely range bound through early parts of the March quarter, with periodic bouts of volatility driven by geopolitical and policy developments, but little sustained impact on broader risk appetite. Underlying support from resilient economic data and relatively steady central bank expectations helped markets look through these events. That dynamic changed decisively in March, when the escalation of conflict between the US and Iran triggered a marked repricing across both equity and bond markets. Rising energy prices, renewed inflation concerns and increased uncertainty around the path of monetary policy drove volatility higher, defining market conditions into quarter end.
AustralianEquities
The ASX 200 marked its second consecutive quarterly decline. The market initially held relatively steady at a headline level through a volatile reporting season and two interest rate hikes by the RBA, but ultimately fell away as oil rose sharply on the US-Iran war.
Australian Equities price index fell2.67% during the quarter with Energy the best performer +34.86%, followed by Utilities+8.48% and Consumer Staples +8.11%. The main laggards for the period were InfoTech which continued to struggle under AI concerns, falling -28.07% during the quarter,while Healthcare and REITs were also poor, falling -17.75% and -17.17% respectively.
At the stock level (withinASX200), Yancoal (YAL) was the standout performer, lifting 67.14% as energyconcerns were front of mind. The weakest performer was Siteminder (SDR), whichfell -55.9% amid AI disruption fears.
InternationalEquities
The MSCI World ex‑Australia Total Return Index (AUD) fell -6.22% inthe March quarter, with the US-Iran war taking centre stage driving equities.
US Equities were the worstperformers for the period (within developed markets), with the Nasdaq the worstperformer as software underperformed on AI concerns, falling -7.11%, theS&P500 falling -4.63%, while small caps outperformed their US peers, as theRussell 2000 climbed 0.58%. European equities were mixed, with the Euro Stoxx down-2.73%, as the FTSE 100 rose 2.47% as a result of its greater exposure toenergy and defensive names, compared to the more cyclical names across theirpeers.
Real Assets
Listed infrastructure had astrong quarter, delivering 9.01% in AUD-hedged terms as investors shiftedto real assets on heightened inflation concerns, while global listed propertywas positive, rising 0.95% in AUD-hedged terms.
Fixed Income
Bond returns were negative asyields rose steeply in March on the back of the US-Iran war, and the expected impactthat would have on inflation as a result of the disruption to global energysupply. The Bloomberg AusBond Composite fell -0.34% and the Bloomberg GlobalAggregate (AUD-hedged) fell -0.25%.
Currency Markets
Over the quarter, the US dollarstrengthened modestly, with the DXY rising 1.67% to finish just below 100 at99.96 as investors favoured safety amid heightened geopolitical risk. Incontrast, the Australian dollar appreciated 3.4% against the US dollar, risingfrom 66.7c to 69.0c, supported by higher commodity prices and reinforced by twointerest rate hikes from the Reserve Bank of Australia during the period.
Commodities
Commodities were mixed over the quarterwith iron ore declining -1.74% to 102.11/t. Gold and Silver continued theirstrong performance rising +8.07% and 4.89%, while oil was the standout, withBrent crude surging 94.49% as the Strait of Hormuz closed in March cause globaldisruption to energy supplies.
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