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March 31, 2026
  
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Today


Equities rebounded this morning with futures in North America pointing higher following reports that Trump may look to end the Iran conflict, even if key oil routes remain disrupted. Despite the bounce, markets remain under pressure, with the S&P 500 down nearly 8% for March and on track for its worst month since 2022. Elevated oil prices and geopolitical uncertainty continue to pose risks to inflation and broader market stability after the monthlong war disrupted a key global energy chokepoint, pushing crude higher and fueling inflation concerns. While investors are cautiously optimistic about a potential de-escalation, uncertainty around the Strait of Hormuz and ongoing geopolitical risks continue to cloud the outlook. Strategists note that even if tensions ease, the shock to energy markets and inflation dynamics is unlikely to fully reverse quickly.

Canada’s economy showed modest momentum at the start of the year, with GDP rising 0.1% in January and an estimated 0.2% in February, driven mostly by gains in goods-producing sectors such as oil and gas. The expansion comes after a softer end to 2025, with manufacturing (particularly auto production) acting as a drag due to extended shutdowns. While first-quarter growth is tracking around 1.5%, economists expect the Iran-driven oil shock to weigh on the outlook through higher inflation, weaker consumer spending, and rising unemployment. Elevated energy prices may benefit Canada’s resource sector, but broader economic impacts point toward stagflation risks. The BoC has indicated it will look through short-term inflation effects while focusing on downside growth risks, highlighting the fragile economic backdrop we find ourselves in at this time. 

Correction territory. Equities in the U.S. extended their selloff yesterday, with the S&P 500 nearing correction territory and the Nasdaq and Dow already in one, as tensions in the Iran conflict and  higher oil prices weigh on growth expectations. Jerome Powell offered limited clarity on the Fed’s policy path, with markets pulling back from rate hike expectations even as inflation risks remain (more on that below). Treasuries moved higher on growth concerns, while energy stocks continued a historic run, highlighting a widening divergence across sectors. Despite the weakness, some strategists suggest the selloff may be entering later stages, with positioning less stretched and valuations, particularly in tech, appearing more reasonable relative to recent levels. In Canada, the TSX was relatively flat in yesterday’s session and is holding on to modest year-to-date gains heading into the final business day of the month. 

Jerome Powell believes longer-term inflation expectations remain anchored despite uncertainty tied to the Iran conflict, giving the Fed room to hold rates steady for now. While higher oil prices could create inflationary pressure and weigh on growth, Powell emphasized the Fed continues to be in a wait-and-see position and will not react immediately. He noted policymakers are closely monitoring inflation expectations, as supply shocks can become more problematic if they begin to shift. Powell also addressed volatility in private credit markets, acknowledging a correction is underway but saying there is no current evidence of spillover risk to the banking system. Overall, the Fed appears cautious but not ready to adjust policy as it evaluates geopolitical and financial risks. 

Not out of the woods yet. China’s largest banks, including Industrial and Commercial Bank of China and China Construction Bank, reported nearly flat profits last year as the country’s economy continues to struggle with a property sector crisis and broader slowdown. Net income growth was under 1% for ICBC and CCB, while Bank of Communications posted a modest 2.2% increase. Asset quality showed mixed signals, with slight improvements in some non-performing loan ratios but deterioration in others, highlighting uneven stress across balance sheets. The results point to a banking sector that is absorbing, rather than offsetting, economic weakness, limiting its ability to support growth.  External pressures may add to this backdrop as higher oil prices and geopolitical risks raise funding costs and weigh on borrower resilience. While margins are expected to tighten further, lenders may benefit from the repricing of roughly 50 trillion yuan in maturing deposits at lower rates, helping offset some pressure. 

Who could have predicted this? Euro-area inflation rose to 2.5% in March, marking its biggest increase since 2022 as higher energy costs tied to the Iran conflict fed through to prices, reinforcing expectations of rate hikes by the ECB. While headline inflation accelerated, underlying pressures were more mixed, with core inflation and services both easing, suggesting limited second-round effects so far. Markets are pricing in two to three ECB rate increases this year, with policymakers signaling readiness to act if energy-driven inflation continues. At the same time, rising inflation expectations among consumers and businesses are becoming a key concern for officials with growth forecasts now being revised lower as higher energy costs weigh on demand and economic activity. 

Iconic UConn-ic comeback. UConn’s path to the Final Four has had a bit of everything, but nothing topped the comeback against No. 1 Duke on Sunday. Down 19, they chipped away, then stole it late, literally, capitalizing on a Duke turnover with six seconds left. Down 72–70, freshman Braylon Mullins stepped into the pressure-filled moment and buried a near half-court buzzer-beater with 0.3 seconds on the clock. It was the kind of shot that instantly earns a place in March Madness lore. On the other side, a tough break for Duke’s Cayden Boozer, whose late turnover turned the game around. He didn’t shy away from it after, putting it on himself in the post-game. That’s the harsh reality of this tournament, or any competitive sport; one play can define a season, but it’s often the losses that shape what comes next. And for those hiding under a rock who haven’t seen Mullins’ shot, here is the last five min of the game for your (re)enjoyment (skip to the 3 min mark if you only care to see the shot).  


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Company news


Eli Lilly has agreed to buy Centessa Pharmaceuticals Plc in a deal worth up to $7.8 bln, as the obesity giant seeks to expand its portfolio into treatments for sleep disorders. Centessa is advancing a pipeline of orexin receptor 2 (OX2R) agonists designed to address the neurobiological system critical to the sleep-wake cycle to treat excessive daytime sleepiness and disorders of impaired wakefulness. Its lead investigational candidate cleminorexton (formerly ORX750) has demonstrated a potential best-in-class profile in Phase 2a clinical studies across narcolepsy type 1, narcolepsy type 2, and idiopathic hypersomnia.

Biogen has agreed to acquire Apellis Pharmaceuticals for $5.6 bln, expanding its treatments in immunology and rare diseases in one of the company’s largest-ever acquisitions. Biogen will gain two approved drugs in the deal. Apellis’ best-selling medicine is Syfovre, which treats an immune disorder that’s a leading cause of blindness. It generated $587 mln in revenue last year. The other, Empaveli, treats both a blood disorder and rare kidney diseases, the latter of which has become an area of focus for Biogen. Last year, Empaveli generated more than $100 million in sales. Biogen CEO Chris Viehbacher has been trying to find new sources of growth as the company’s aging multiple sclerosis franchise declines and its Alzheimer’s treatment gets off to a slow start.   


Commodities


Oil prices are higher and setting up for its record month with markets digesting latest comments from Trump, who is willing to end U.S. military operations in Iran even if the Strait of Hormuz remains closed. The Wall Street Journal reported that Trump and his aides assessed that a mission to reopen the strait would push the war beyond his timeline of four-to-six weeks, and that the president decided the U.S. should instead achieve its main goals of crippling Iran’s navy and missile stockpiles, and wind down current hostilities. The conflict has extended into its fifth week and attacks by the US, Israel and Iran are ongoing, including the overnight strike on the Kuwaiti tanker. In the U.S., the American Automobile Association reported regular unleaded gasoline rose to $4.018 a gallon on Monday, topping $4 for the first time since August 2022. Prices have surged more than $1 since the start of the war, up from $2.98 on the day before the U.S. and Israel began attacks against Iran. Increases in pump prices are a major political risk for Trump’s White House in a midterm-election year. In addition, the gains stand to complicate the challenge for the Fed, as Chair Jerome Powell and policymakers seek to keep price rises in check while sustaining employment.

Aluminum is heading for its biggest monthly gain in nearly two years, as the war in the Middle East disrupted supplies and damaged local production facilities, tightening the global market.  The lightweight metal advanced toward $3,500 a ton on the LME, putting it on course for a monthly gain of 10%. That’s the most since April 2024, and contrasts with a broader downtrend for metals in March. Approximately 10% of aluminum’s global production is concentrated in the Persian Gulf, with exports curtailed by the closure of the Strait of Hormuz. In addition, Iranian drones and missiles have sruck plants run by Aluminium Bahrain BSC and Emirates Global Aluminium PJSC. The disruptions have sent premiums soaring in other locations, including Japan, while prompting a pickup in orders for products from China, which dominates global output.  


Fixed income and economics


Treasuries are continuing to move higher as the ongoing Middle East conflict is increasing the prospect of slowing global growth, outweighing inflation concerns, and reviving demand for Treasuries as a haven. The U.S. two-year yields slipped one basis point to 3.82%, after falling eight basis points on Monday. However, they are still up more than 40 basis points since the war began and headed for the biggest monthly jump since October 2024. The 10-year dropped two basis points to 4.33%, down from an eight-month high of 4.48% last week. Rate markets are now pricing the Fed will hold rates steady in a 3.5% to 3.75% range this year, with a small chance of a quarter-point cut by the middle of 2027. Across the pond, European bonds largely followed U.S. peers higher, helped by data that showed eurozone inflation rose 2.5% from a year ago in March, faster than the previous month’s pace but slower than expected. The equivalent UK yield dropped one basis point to 4.92%. Swaps tied to policy-meeting dates imply between two and three quarter-point hikes from the ECB and BOE this year.  

Chart of the day

 

Markets


Quote of the day

 

Success consists of going from failure to failure without loss of enthusiasm.

Winston Churchill

Contributors: A. Innis, A. Nguyen, P. Kwon

Charts are sourced to Bloomberg unless otherwise noted.

The opinions expressed in this report are the opinions of the author and readers should not assume they reflect the opinions or recommendations of Richardson Wealth Limited or its affiliates. Assumptions, opinions and estimates constitute the author’s judgment as of the date of this material and are subject to change without notice. We do not warrant the completeness or accuracy of this material, and it should not be relied upon as such. Before acting on any recommendation, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. Past performance is not indicative of future results. Richardson Wealth Limited is a subsidiary of iA Financial Corporation Inc. and is not affiliated with James Richardson & Sons, Limited. Richardson Wealth is a trade-mark of James Richardson & Sons, Limited and Richardson Wealth Limited is a licensed user of the mark. Richardson Wealth Limited, Member Canadian Investor Protection Fund.

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