Trading update: 26 March 2026

Markets are currently caught between geopolitical gloom and technological boom. While BCA Research warns of a potential pandemic-style shutdown if tensions in the Middle East don’t ease soon, Citadel’s Scott Rubner suggests the S&P 500 is primed for a rally. Other headlines that defined the week in markets include the escalating war over agentic AI, the US Fed considering relaxing bank capital rules, skyrocketing US home insurance costs, and the surprising resilience of high-income South African consumers.

Rubner’s rally call

According to Citadel Securities’ head of equity and equity derivatives strategy, Scott Rubner, the S&P 500 (VOO-NASQ) could come roaring back as a record streak of short bets is at risk of unwinding, priming US equities for a comeback, with hedge funds and systematic strategies poised to drive the next wave of buying. “The conditions for a rally are very high — if geopolitical tensions ease — considering one of the largest short positions on US stocks that we’ve ever seen,” said Rubner in an interview carried by Bloomberg. The setup leaves markets highly sensitive to the next positive catalyst, he said, cautioning it’s not yet a “buy stocks today” call.

All-out AI battle

One of China’s leading AI players, Alibaba, is launching a new chip for agentic AI and inference computing, adding to a portfolio of semiconductors designed to drive its AI ambitions. Bloomberg reports that Alibaba’s chip subsidiary T-Head aims to compete with Nvidia Corp. (NVDA-NASQ) and Huawei Technologies Co. The Chinese company’s proprietary AI accelerators have already entered mass production, said CEO Eddie Wu during an earnings call.

Capital harmonisation

Wall Street lending giants would get relaxed capital requirements under proposals unveiled by the US Federal Reserve. The move could potentially unleash billions of dollars for lending, share buybacks and dividends. Officials are pitching the package as part of “a harmonisation of capital”. If finalised, these plans would amount to some of the biggest bank-capital rule changes since those enacted following the 2008 global financial crisis. According to a Fed memo, the proposals, when combined, are expected to result in a “moderate decrease” in capital requirements for big banks. 

Pandemic-style pandemonium

Marko Papic, chief strategist at BCA Research, has warned that if the Middle East conflict doesn’t get resolved over the next seven to 10 days, “we’re looking at a pandemic-style shutdown of the global economy.”

Dollar dominance

Hedge funds, asset managers and other speculators have taken on $6.2 billion worth of wagers that the US dollar will strengthen as of March 17, according to Commodity Futures Trading Commission data compiled by Bloomberg.

Asian winners

Morgan Stanley says Chinese equities could outperform if escalating tensions in the Middle East keep the Strait of Hormuz closed for at least a month. According to analyst views carried by Bloomberg, in such a scenario, China would potentially outperform North Asia given relative energy and supply chain security. By contrast, a de-escalation in the Middle East conflict would likely lead by a recovery in Japan, South Korea and Taiwan.

Analysis paralysis

Bank of England Chief Economist Huw Pill warned rate-setters cannot allow “the fog of uncertainty” to paralyse them in tackling a resurgence in inflation caused by war in the Middle East. According to a Bloomberg report, Pill said that risks to the UK central bank’s ability to keep a lid on inflation are “mounting” and argued that worries over structural changes to the economy justify a cautious approach.

Gassed out

Soaring gas prices are pushing Europe to rely more on coal generation, even as demand falls, and solar generation increases as sunnier, milder weather sets in. German coal plants have raised their share of generation by about 2% in March compared with February, even as sunnier and windier conditions boost renewables. At the same time, gas-fired power output in Europe’s biggest market has dropped by more than a third as surging wholesale prices make the fuel less profitable for electricity generation. 

Shell shocked

Shell (SHELL-TRQX) CEO Wael Sawan said that Europe will soon begin to experience the same kind of disruption to fuel supplies that Asia has faced due to the war in Iran in recent weeks. Bloomberg reported Sawan as saying the effects of the conflict continue to ripple out across global fuel markets, first in South Asia, then Southeast Asia and Northeast Asia, and increasingly in Europe as April approaches.

Software slam

Software stocks took another hit after reports emerged that Amazon (AMZN-NASQ) is working on various new AI tools, including an AI agent capable of automating functions for sales, business development, and other teams, which rekindled industry disruption fears. Data shows that an ETF that tracks software stocks fell 4.3%, marking the largest decline in a month.

Next-gen weight loss

One of Eli Lilly & Co.’s (LLY-NASQ) most highly anticipated experimental medicines – retatrutide – helped diabetic patients lose more weight than any drug currently on the market, underscoring its potential in the increasingly crowded race for next-generation therapies.

Insured losses

US home insurance premiums are set to rise for a fifth straight year in 2026 due to losses from extreme weather and high rebuilding costs. The average annual premium is projected to increase to approximately $3,057 this year, according to Bloomberg, with some states experiencing significantly higher jumps, including Florida, where the average premium is approaching $8,500. Rising costs are forcing households to make difficult choices, with more than half of homeowners surveyed making financial sacrifices to afford coverage and nearly three in 10 considering dropping coverage altogether. For the first time, insurance costs are consuming roughly 9% of a typical homeowner’s monthly mortgage payment, a record high that is reshaping investment thesis in real estate, finance, and the insurance industries. As customers baulk at higher home insurance prices, they are increasingly shopping around. Berkshire Hathaway (BRK.B-NASQ) recently reported a drop in retention rates as customers switched to rivals offering more competitive bundled packages. CEO Greg Abel has signalled that Berkshire expects “continued headwinds in 2026” and is writing less property and casualty (P&C) business for now. The company is prioritising underwriting discipline over market share, essentially saying they won’t take on the risk unless the price is exceptionally high.

Thin trade

South Africa’s financial regulator warned about the decrease in local listings, saying this raises questions about the depth and vibrancy of public capital markets and about how they can support economic growth. The Johannesburg Stock Exchange (JSE-JSE) is home to about 280 firms, down from as many as about 850 listings in the mid-1990s, with 80% of the exodus occurring before 2005. The trend suggests that smaller and less profitable firms are significantly more likely to exit public markets, which could concentrate market capitalisation among a smaller number of larger firms.

Big spenders

According to insights from Investec (INL-JSE) Private Bank card spend data for Q126, average consumption spending recovered to +4.3% for the quarter, improving from +3.1% YoY and +0.9% YoY in H225 and H125, respectively. Consumers were spending on airlines, electronics, home improvement, apparel, and restaurants, which all outpaced non-discretionary spending in groceries and fuel. This trend underscores the resilience in high-income consumer behaviour.

Sector focus: SA Apparel Retailers

Data shared by the Retailers’ Liaison Committee (RLC) shows that the SA apparel market grew +2.3% YoY in Feb, with the Beauty (+10.6%), Women’s Wear (+4.2%), Men’s Wear (+3.4%), and Home (+1.6%) categories all rising. The Kids & Baby category declined by -3.8%. However, the current fuel spike, inflation risks and interest rate uncertainty threaten the volume recovery seen over the last two months.