The first quarter of 2026 is in the books. Cautious optimism about the stock market quickly gave way to a clash between geopolitical risk management and asset rotation.
As conflict in the Middle East has intensified, hopes for a rate cut have turned into concern about a rate hike. Inflation fears are making a comeback, as the prices of energy and essential goods have skyrocketed. Speculative assets were sold, along with overheated commodities, as highly leveraged markets took their gains.
The winners: energy
The main catalyst was the escalation of conflict in the Middle East, which resulted in the effective closure of the Strait of Hormuz, one of the world’s most important choke points for goods.
The result was a huge “risk premium†in energy markets, leading to one of the biggest commodity rallies in recent history.
“Brent oil prices jumped 63% in March, the biggest monthly increase in four decades. Beyond energy markets, grain prices have also increased given the importance of the strait for the passage of goods that are essential to food production,” the JPMorgan analyst wrote Zara Nokes in a report.
Domestic fuel oil emerged as the best performing product, with an extraordinary increase of 100% during the first quarter. Bloomberg Intelligence Senior Commodities Strategist, Mike McGlonefound that the ratio between domestic fuel oil and WTI crude had reached 4.5, an extreme level that had not been observed since the 1980s.
Gasoline followed, with US retail prices breaking the psychological $4.00 per gallon mark for the first time in over 3 years.
The winners: increases in the “cost of living” in eggs
Beyond energy, the first quarter also saw an increase in essential food products, with eggs being particularly affected by this increase in the “cost of living.†Prices rose sharply, including a 50% increase over one month in March alone, reflecting very limited offer conditions.
A 5.3% year-on-year drop in laying hen stocks added to ongoing disruptions from previous avian flu outbreaks. Although the management of Cal-Maine Foods (NASDAQ:CALM) noted that supply conditions had begun to stabilize, but this was not enough to ease consumer pressure.
Given these prices, Cal-Maine exceeded earnings expectations for the first quarter. Despite the year-over-year decline in revenue, the more stable pricing models provided a surprise. The stock has increased by 5% since the start of the year.
The losers: the supply side correction by cocoa
On the other hand, cocoa has experienced a dramatic turnaround. After peaking at nearly $12,000 per tonne in 2024, prices collapsed to around $3,000 in the first quarter of 2026. This was an emblematic fall from a classic supply-side correction.
Confectionery News reported that improved weather conditions in major producing regions, such as Ivory Coast and Ghana, had boosted production expectations, triggering a sharp revaluation.
However, this decline has not translated into cheaper consumer goods. Chocolate prices remained high as manufacturers had already priced in higher production costs several months earlier, illustrating the disconnect between raw material markets and retail prices.
The losers: the return of cryptocurrencies in 2018
Cryptocurrency markets struggled, posting their worst first quarter performance since 2018. Bitcoin (CRYPTO: BTC) lost 24%, while Ethereum (CRYPTO: ETH) fell around 28%.
Rising inflation fears and changing interest rate expectations have reduced the appetite for speculative assets. Nonetheless, some segments of the cryptocurrency market linked to technological growth have seen exceptional returns.
The value of some AI-driven altcoins has soared, with tokens like RIVER et QUBIC who recorded double-digit gains. This result indicates a structural shift towards cutting-edge technology-led narratives, rather than a signal of capitulation within the sector.
Image : Shutterstock/bangoland
