The first quarter of 2026 has come to an end. Let’s take a look at the key developments across financial markets.
US Stock Indices
- S&P 500 -4.6%
- Nasdaq 100 -6%
- Dow Jones 30 -3.6%
The quarter was challenging for US stocks, primarily due to the conflict in the Persian Gulf. As a result, March erased many of the gains seen at the start of the year. However, when viewed more broadly, the US stock market remains in a strong bull phase.
For example, the Dow Jones has risen for 14 out of the last 17 years (from 2009 to 2025), which is 80% of the time. Over this period, the index has increased by nearly 450%, translating to an annual nominal return of 26.5%. Even if this year proves to be less successful, the sentiment among American investors should remain positive—unless the conflict triggers a global shift.
The issue of the conflict and its consequences is just beginning to be discussed. So far, it is clear that:
- The conflict is reaching a dead end, and resolving it without damaging the reputation of the United States is no longer possible.
- The longer the situation persists, the more severe the consequences may become.
Forex Markets
The US dollar index has started to gradually rise. The reason is the ongoing crisis. If the situation worsens, the Federal Reserve may not only refrain from lowering rates but could even consider increasing them, a possibility that is now being taken seriously.
Another important point to note is the political aspect: Trump has been pushing for a weaker dollar, but the Middle East crisis is causing cracks in the MAGA movement.
Americans love winners, not losers. As the main character in James Clavell’s novel *Shogun* said, ‘Losing is stupid.’ This means that Trump currently appears foolish.
With a ‘foolish’ and losing figure like Trump, even his supporters are questioning whether they should follow his lead, potentially risking their careers.
Conclusion: It is no longer certain that Warren, who will succeed Powell, will support rate cuts. If that happens, the dollar could rise further, and risks for metal prices could increase.
Metal Markets
Recently, journalists asked me if the metals rally would continue. Of course, nothing on the market is certain, as economics is not an exact science.
However, as we can see, several metals are still in the green at the start of the year. The question of what to do in this situation has already been discussed. It may not be wise to increase positions, but closing existing ones might also be premature.
Russia
The drop in oil and gas revenues for the first three months has negatively impacted the ruble. To recall, the budget received 393.3 billion in January, 432.3 billion in February, and 617 billion in March. That totals 1.443 trillion for the quarter, while the annual target is 8.9 trillion, or about 740 billion per month.
Meeting the target is currently in doubt. As a result, there has been little foreign exchange revenue coming into the market, and the ruble has started to decline.
The situation in March has slightly changed. With a lag of 1-2 months, a large volume of revenue is expected to flow into the market, which could cause the ruble to rise again. We are already seeing this happen now.
FAQ
What caused the decline in US stock indices during Q1 2026?
The decline was mainly due to the conflict in the Persian Gulf, which affected investor sentiment and led to losses in major indices like the S&P 500 and Nasdaq 100.
How did the US dollar perform in Q1 2026?
The US dollar showed a gradual increase, driven by the ongoing crisis and potential interest rate hikes by the Federal Reserve.
What were the key trends in the metal markets during Q1 2026?
Gold and silver saw gains, while platinum and palladium declined. The overall trend in metals remained mixed, with some showing resilience despite market volatility.
