Blog week ending, 20th March 2026
Markets:
- Local and global equity markets weakened as conflict in the Middle East showed no signs of easing.
- Bank of America’s latest fund manager survey showed a sharp spike in cash holdings, the largest increase since March 2020. Investor sentiment and economic outlook indicators both fell in the survey.
- In local stock news, Lynas Rare Earths shares rose after the mining company signed an offtake agreement with the US Department of War.
- Consumer discretionary stocks came under pressure following the RBA’s second consecutive rate hike amid concerns about the impact on household spending.
- Woodside Energy appointed Liz Westacott as CEO and Managing Director, a widely anticipated move. Westacott previously led the company’s Australian operations and replaces the former CEO, who departed to join BP.
- BHP announced Brandon Craig will succeed Mike Henry as CEO following more than six years in the role. Craig previously led BHP’s iron ore division, through the pandemic and most recently headed its Americas operations.
- Viva Energy shares surged 15.2% to a one-year high while the broader energy sector rallied on higher oil prices. Woodside shares also climbed to a two-year high.
- Oil prices remained heightened and volatile, rising on escalating conflict headlines before easing on reports that some tankers had resumed transit through the Strait of Hormuz. Daily oil exports from the Middle East are estimated to be at least 60% lower than a month ago.
- Gold prices continued to weaken, falling to three and half week low as investors sought liquidity while traders scaled back expectations for US Federal Reserve rate cuts this year.
Economics:
- The RBA raised the cash rate by 0.25% to 4.1% at its March meeting, following a hike in February. The decision was in line with expectations following recent hawkish commentary from officials. The 5-4 vote for a raise shows a divided board.
- Australian full-time employment fell by 30,500 in February, while total employment increased by a strong 48,900. A higher participation rate pushed the unemployment rate to 4.3% from 4.1% in January.
- The US Federal Reserve left interest rates unchanged at 3.50-3.75% in March, marking a second consecutive holding, and matching expectations. The board cited uncertainties surrounding the Iran conflict, while lifting growth forecasts for both 2026 and 2027.
- The US economy expanded at an annualised 0.7% in the December quarter, its weakest result since the March 2025 and well below the advance estimate. Exports, consumer spending, and government spending all underperformed earlier projections.
- The US Fed’s preferred measure of inflation rose 0.4% in January, matching December’s pace and expectations. Annual inflation lifted 3.1%, the highest in nearly two years, prompting markets to sharply scale back expectations of US rate cuts this year.
- US producer prices jumped 0.7% in February, well above forecast of a 0.3% rise and January’s 0.5% gain. It was the largest monthly increase in seven months, with goods prices soaring the most since August 2023.
- US consumer sentiment softened in March though the result was slightly better than expected. Sentiment fell to a three-month low as households reacted to the Iran conflict and higher petrol prices, while one-year inflation expectations held steady at 3.4%.
- Euro area inflation rose to 1.9% in February, up from January’s sixteen-month low of 1.7%, driven by services inflation. The reading did not yet reflect the sharp rise in energy price late in the month.
- Germany’s economic sentiment plummeted in March coming in well below market expectations as confidence was impacted by the escalating conflict in the Middle East.
- Japanese exports rose 4.2% in February versus the same time last year, slowing sharply from a 16.8% and marking the weakest growth since last October, reflecting softer demand from China and the US.
- Chinese industrial output, retail sales, and fixed asset investment all surprised to the upside, indicating some improvement in economic momentum. However, the property sector remained under pressure (albeit less so more recently) and unemployment ticked higher.
Politics:
- The conflict in Iran continued with no signs of de-escalation, as the US called for their allies to assist their military efforts whilst Saudi and UAE officials called for an immediate halt to the escalation. Reports indicated the US targeted key military sites on Kharg Island, Iran’s main crude export hub, while avoiding oil terminals and related infrastructure. Iran, meanwhile, struck a major LNG facility in Qatar.
- Iran’s newly appointed leader, Mojtaba Khamenei, rejected US threats of a broader conflict and calls for unconditional surrender, reaffirming Iran’s retaliation campaign against American allies across the Gulf. He also pledged to keep the Strait of Hormuz closed to US and Israeli vessels.
- The Trump administration said it would temporarily allow countries to purchase Russian oil and gas aiming to contain rising global energy costs. The US Treasury Secretary also called for an international coalition to escort oil tankers through the Strait of Hormuz.
- The Australian government re-iterated the country’s ability to reliably supply LNG while urging trading partners to increase investment in domestic gas resources. At the same time, Energy Minister Chris Bowen said rural and regional areas are facing unacceptable shortages of fuel, driven by a “massive explosion in demand”.
- US Treasury Secretary Scott Bessent described the two-day US-China trade talks in Paris as “very good” with wide-ranging discussions held ahead of President Trump’s planned visit to Beijing on 31st March.
Written by Christopher Lioutas
Chairman – Harbourside Investment Management
