Operational environment

The first quarter of 2026 was clearly twofold from an investment market perspective. January and February were mostly positive, with equity prices rising broadly across various sectors. In March, however, the operating environment changed significantly and uncertainty in the markets increased as the conflict between the United States and Iran led to the closure of the Strait of Hormuz, cutting off about one fifth of the world’s oil supply. The closure of the Strait drove oil prices sharply higher and weighed down the stock markets. Interest rates also rose globally as markets anticipated an acceleration in inflation on the back of rising energy prices.

The disruption brought about by artificial intelligence (AI) emerged as the second defining market theme of the quarter. Markets assessed AI advancement as posing a particular threat to the business models of traditional software companies, which weighed on software sector valuations during the early part of the year.

The MSCI World Index, which tracks global equity markets, declined by 1.5 percent in euro terms. Emerging markets outperformed developed markets: the MSCI EM Index delivered a total return of 1.8 percent. In the United States, the S&P 500 Index returned -2.7 percent in euro terms, and in Europe, the total return of the STOXX Europe 600 Index was -1.1 percent. In Finland, the stock market rose exceptionally by 2.7 percent, standing out positively from other developed markets.

Expectations in the fixed income markets changed significantly during the quarter: at the beginning of the year, the markets priced in two to three rate cuts for 2026, but these expectations disappeared entirely as oil prices rose in March, and by the end of the quarter, there was even talk in the markets of rate hikes. Both the US Federal Reserve (Fed) and the European Central Bank (ECB) kept their policy rates unchanged throughout the first quarter. The Fed’s target range remained at 3.50–3.75 percent and the ECB’s deposit rate at 2.00 percent.

In fixed income investments, higher-rated corporate bonds fell by 1.0 percent and lower-rated high yield bonds by 1.5 percent. The war in Iran and the strengthening of the US dollar particularly weighed on emerging market bonds, which declined by 2.4 percent. The euro weakened by about 1.6 percent against the dollar.

Updated in connection with the publication of Evli Plc's Interim Report 1–3/2026 on April 23, 2026.