Last Quarter at a Glance
Global equities declined in first quarter as early gains reversed sharply in March following the outbreak of the Iran war and the associated energy shock.
Equities
Germany’s Fiscal Boost Remains a Tailwind Despite Near-Term Risks
German equities entered 2025 with strong momentum, supported in part by a sharp shift in Germany’s fiscal outlook. After years of underinvestment, the government announced materially higher spending on infrastructure and defense. However, that momentum faded through 2025 into 2026, and German equities stalled.
Last Week at a Glance
Global equities fell for a fourth consecutive week amid rising expectations for a more extended Iran War, higher commodity prices, and renewed near-term inflation concerns.
The Iran War: Impact on Energy, Inflation, and Markets
The war in Iran has triggered a historic disruption in the Strait of Hormuz, driving oil & gas prices higher and exposing vulnerable energy-importing regions. This shock is fueling concerns over higher inflation and rising bond yields, creating a volatile environment where commodities lead while global equities and traditional bond diversifiers underperform.
Will the Iran Conflict Trigger a Pandemic-Style Inflation Spike?
No, we do not think this is the likely outcome. While the path forward is highly uncertain, several key factors suggest that a repeat of pandemic-era inflation is unlikely.
US Manager Universe Statistics: Fourth Quarter 2025
This publication presents manager performance for 37 asset classes and substrategies, showing the median, mean, and key percentiles of return. Relevant indexes for each asset class are also included to provide market context.
Review of Market Performance: Calendar Year 2025
Global economic growth hovered near trend in 2025. The dollar weakened sharply, while global equities and commodities posted strong gains. Bond returns improved as rates and credit spreads eased.
Japanese Election Result Should Boost the Economy and Ultimately the Japanese Yen
Overall, we see the election outcome as positive for the Japanese economy and, by extension, the yen.
VantagePoint: Asian Equities Revisited
While Asia has demonstrated resilience to economic and geopolitical challenges, risks remain, and we expect economic growth and equity beta prospects to moderate as the region faces headwinds from slowing export growth and cooling consumption.
2026 Outlook: Public Equity Views
Within public equities, investors should modestly overweight global ex US equities, developed markets small-cap stocks, and Latin American equities in 2026, as these regions offer attractive valuations, improving growth prospects, and diversification benefits.