Global markets experienced a volatile and negative month in March 2026, driven by a sharp escalation in geopolitical tensions in the Middle East. The resulting surge in energy prices weighed on risk assets and contributed to a broad repricing of inflation expectations.

Equity markets declined across most regions. The S&P/TSX Composite returned -4.3% for the month, with strength in energy insufficient to offset broader weakness. The S&P 500 returned -2.8%, as higher energy prices and increased uncertainty pressured growth expectations. International developed equities underperformed, with the MSCI EAFE returning -8.2%, reflecting significant declines in European markets. Emerging markets were hit hardest, with the MSCI Emerging Markets Index returning -11.1% amid deteriorating risk sentiment and capital outflows.

Fixed income markets were also negative and notably did not provide their typical diversification benefits. The FTSE Canada Universe Bond Index returned -2.0%, while the Bloomberg Global Aggregate Bond Index returned -0.9%. Bonds moved broadly in tandem with equities during the month, as rising inflation expectations and energy-driven uncertainty pushed yields higher before a modest late-month flight to quality.

Commodities were the key driver of market dynamics. Oil prices surged materially, with Brent crude rising sharply and WTI moving above US$100 per barrel, reflecting supply concerns tied to the Middle East conflict. This marked one of the largest monthly increases in oil in recent years and provided a partial offset for Canadian equities. In contrast, gold declined by -11.3%, failing to act as a safe haven during the period.

From a currency perspective, the Canadian dollar depreciated approximately 2.3% against the U.S. dollar over the month. This provided a modest tailwind to unhedged global exposures for Canadian investors, partially offsetting local currency losses.

Against this backdrop, the Balanced Fund returned -3.5% for the month, demonstrating resilience relative to broader equity markets. The Equity Fund returned -6.4%, while the Bond Fund returned -1.5%, as rising yields weighed on fixed income markets. The Money Market Fund returned 0.2%.

Overall, March was characterized by a rapid repricing of geopolitical risk, higher energy prices, and a broad risk-off environment, with both equities and bonds declining simultaneously.