“Three Steps Back”
Lauretta “Retz” Ann Reeves, CFA AWMA
Intensified fighting in the Middle East and restrictions on traffic through the Strait of Hormuz and a jump in oil prices in March, 2026, led to sharp corrections in Equity Markets around the world. Even with hope of a quick resolution to the war and a late month rally, the MSCI Standard All-Country ex-USA Index fell 10.71% for the month, which led to a -.6% return year-to-date (January 2, 2026 to March 31, 2026). The MSCI US representative index fell 4.9% for the month and 4.52% year to date.
All developed market regions suffered from fears that the conflict would escalate inflation, lead to higher interest rates and increase the potential for recessions in some regions. The European index was down 9.8% for the month and 2.68% year-to-date. The Pacific index was down 11.18% for the month, but due to strong gains early in the year, was up 1.97% year-to-date. The resource heavy Canadian index was somewhat resilient, down only 5.58% for the month and up 1.43% for the quarter. The aggregate developed World ex-USA index was down 9.64% for the year and .81% for the quarter.
In aggregate, MSCI’s Emerging Market index was down 13.03% for the month and .10% for the quarter. Among the worst performing regions was EFM (Emerging Frontier Markets) Africa, which was down 17.71% for the month and 3.48% year-to-date. Tech heavy EM Asia was down 14.34% for the month and 1.45% for the quarter. EM Latin America with a strong start to the year and a good exposure to energy and material companies was down only 4.25% for the month and up 14.67% year-to-date.
Companies whose products are perceived to be threatened by AI, including: SAP, Wipro, Infosys and eyeglass provider Essilor, were among our International Value Portfolio’s worst performers this quarter. Among the best performers were Canadian Resources, Mitsubishi Corp and the iShares MSCI South Korea ETF.
With a more defensive mix of holdings, Bastion’s International Equity Income Portfolio performed better than its value counterpart. Tariffs had a negative impact on its Diageo and LVMH holdings. UK Barclays underperformed due to concerns over its exposure to UK Mortgage. Provider MFS. Not surprising, TotalEnergies was one of the best performers, as were semiconductor assembly firm ASE and integrated oil and gas company OMV.
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1 Unless otherwise noted, performance numbers are based on the relevant MSCI index data as viewed on April 7, 2026
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