March ends in a fog of noise and nerves

March 2026 looks set to enter the record books as one of those months of extreme readings that markets find impossible to ignore. On the morning of the final session of both the month and the quarter, economic and geopolitical strains are running high. Confusion reigns on almost every front, especially over how the United States intends to extricate itself from the Iranian quagmire.

"Ah, March is a lovely month, the month of surprises." I am not sure many in finance would agree with French poet Alfred de Musset on the "lovely" part, but the line works well enough when it comes to surprises. One might even say it has become the month of dissonance, with mixed messages coming from every direction.

First, the geopolitical noise.

Donald Trump says the conflict in Iran is nearing an end, for the twelfth time in 30 days, according to Axios. Donald Trump threatens to pulverise the country's critical infrastructure. Donald Trump tells his advisers he is prepared to end the war without reopening the Strait of Hormuz, according to the Wall Street Journal. Benjamin Netanyahu says the war is now beyond halfway in terms of objectives, though not in terms of duration. Each new statement still jolts the oil market, but not enough to drag prices sustainably below $100: WTI remains at $101 and Brent at $114. Overnight reporting from the WSJ merely offset the impact of an Iranian drone strike on a Kuwaiti tanker in Dubai port. That is the fog of war. The White House smoke machine seems jammed on full blast, and no one appears able to switch it off. Yet Trump is also a pragmatist, and he understands the political and economic cost of letting time work against him. The difficulty now is finding a credible way out.

The same confusion applies to monetary policy.

In the space of three months, markets have gone from counting prospective rate cuts to piling up forecasts of rate rises. In the United States, Jerome Powell restored a degree of calm overnight by reminding investors that the Federal Reserve has little real control over supply shocks, particularly a spike in oil prices. Put simply, higher rates will not bring crude prices down. Traders responded by almost entirely scrapping their bets on a Fed hike before year-end. In Europe, by contrast, investors still believe the ECB will have to tighten policy several times in the months ahead. In one sense, the tightening has already happened. In any case, the market is changing its mind by the day because it has lost its bearings.

There is similar noise around AI.

Artificial intelligence remains a powerful investment theme. But will it also become a powerful source of growth, and eventually of broad-based profits? The market is starting to have doubts, and a few former darlings are being sacrificed in the process. Micron has dropped 20% in a week. Even so, there is still plenty of room for it to turn into a poor investment, given that the stock has risen fivefold over three years. Nvidia is down 12% since the start of the year and 22% below its 30 October peak. That still amounts to $ 1.144 trillion of market value wiped away, roughly equivalent to the combined capitalisation of Europe's three largest listed companies, ASML, Roche and AstraZeneca. Paradoxically, stocks such as Micron and Nvidia are nowhere near the most overstretched names in the technology sector. If anything, the opposite is true. That makes the move harder to read.

And then there is the market fallout from all of the above.

The Nasdaq 100 has managed to rise only twice in the past nine sessions. It fell another 0.78% yesterday, even as the ageing Dow Jones put on a defiant 0.2%. Europe is holding up better, despite being on the front line of the short-term oil shock. Even so, the STOXX Europe 600 is down 8% over one month. Yesterday, hopes of de-escalation in the Middle East helped it recover 1%. Four rising sessions out of nine is better than the Nasdaq, but it still leaves a fragile picture. Everything now depends on oil prices easing back. If that happens, some of the noise elsewhere should begin to fade.

There is also a heavy macroeconomic diary today. China set the tone overnight with stronger-than-expected March activity data for manufacturing. For now, Beijing seems content to watch events unfold without exposing itself too openly. The English-language press believes the US entanglement is playing into China's hands. That is probably not wrong.

Across Asia-Pacific, investors no longer seem willing to wait on the sidelines, although Australia did manage a 0.25% gain this morning. Weakness in several AI-related stocks dragged Taiwan down 2.4% and South Korea 3.8%. Japan fell 0.6%, while mainland China and Hong Kong were off by around 0.1%. India is closed for a public holiday. US futures are pointing higher, on hopes that Donald Trump will make the concessions needed to secure a ceasefire. Europe is more mixed, however, with the VIX fear gauge still above 30, a sign that stress levels remain exceptionally high.

Today's economic highlights:

Today's schedule includes: the RBA meeting minutes in Australia; the NBS Manufacturing and Non-Manufacturing PMI in China; housing starts in Japan; in the United Kingdom, the Nationwide Housing Prices MoM and YoY along with the current account; in Germany, retail sales MoM and YoY followed by unemployment figures; in France, preliminary inflation rates YoY and MoM; in the Euro Area, flash inflation rates YoY and MoM; in Italy, preliminary inflation rates YoY and MoM; in Canada, preliminary GDP MoM; in the United States, the S&P/Case-Shiller Home Price YoY, Chicago PMI, JOLTs job openings, CB consumer confidence, and Fed speeches by Goolsbee and Barr, as well as the API crude oil stock change. See the full calendar here.

• GBP / USD: US$1.32
• Gold: US$4,568.71
• Crude Oil (BRENT): US$107.01
• United States 10 years: 4.33%
• BITCOIN: US$67,431.9

In corporate news:

• Unilever is nearing a $60 billion merger deal with McCormick, combining their food businesses, with an announcement expected alongside McCormick's first-quarter results.
• HgCapital Trust has exited its stake in Geomatikk Group, valuing the investment at £20.4 million.
• Fitch upgraded Rolls-Royce's rating to A- from BBB+, citing improvements in its financial profile.
• RTW Biotech reported a 35% increase in net asset value per share for 2025, outperforming several biotech indices.
• GSK announced the approval of its asthma drug Exdensur and the acceptance of its hepatitis B drug bepirovirsen for regulatory review in China.
• Swiss MPs are hinting at a compromise on the regulatory capital requirements for UBS, according to the FT.
• AB Volvo becomes the exclusive distributor of Lynk in Europe.
• Aena has won the tender for Rio’s Galeão Airport with a bid of $552 million.
• Siemens AG plans to split its Digital Industries and Smart Infrastructure divisions into smaller units as part of its “One Tech Company” strategy, Reuters reported.
• The Meloni government is set to reappoint Claudio Descalzi as head of Eni, Bloomberg reports.
• A former Deutsche Bank executive is suing the bank for at least $624 million, Bloomberg reveals.
• DHL is expanding its air freight capacity with new routes between Europe and Asia.
• Holcim is finalising its takeover of Cementos Pacasmayo.
• Merck & Co’s cholesterol treatment met its primary endpoint in a head-to-head trial.
• Chevron has reported major storm damage at its Wheatstone LNG site in Australia.
• Meta is trialling a premium subscription service on Instagram, according to TechCrunch.
• Apollo is reportedly set to acquire Atlantic Aviation from KKR for $10 billion.
• SpaceX is considering excluding Robinhood and SoFi from its IPO as the brokers negotiate their stake, Reuters has learnt.

See more news from UK listed companies here

Analyst Recommendations:

• Hays Plc: BNP Paribas maintains its outperform recommendation and reduces the target price from GBX 64 to GBX 40.
• Reckitt Benckiser Group Plc: BNP Paribas maintains its outperform rating and reduces the target price from USD 20.40 to USD 18.30.
• Pagegroup Plc: BNP Paribas maintains its underperform recommendation and reduces the target price from GBX 200 to GBX 115.
• Astrazeneca Plc: William O'Neil & Co Incorporated maintains its buy recommendation.
• Domino's Pizza Group Plc: Barclays upgrades to market weight from underweight with a target price of GBP 1.90.
• The Weir Group Plc: JP Morgan maintains its overweight recommendation and reduces the target price from GBP 38 to GBP 35.
• Greatland Gold: Barrenjoey Markets Pty Ltd maintains its overweight recommendation and raises the target price from AUD 18.50 to AUD 19.
• Breedon Group: Stifel maintains its buy recommendation and reduces the target price from GBX 430 to GBX 415.
• Kier Group Plc: RBC Capital initiates a sector perform recommendation with a target price of GBX 215.