War in Iran rattled global markets in Q1 2026 — and in doing so, may have quietly set the stage for one of the most powerful bull-market extensions of the decade.

What actually happened to global markets in Q1 2026?

The year opened with momentum. Equity markets entered 2026 on bullish footing, extending the rally that had characterised late 2025. Then came March. The outbreak of conflict with Iran soured sentiment rapidly, triggering a near-correction from late February’s highs. By quarter-end, the MSCI ACWI Index had declined 3.2% — a sharp but, in Fisher’s assessment, temporary setback driven more by fear than fundamentals.

Critically, the correction did not arrive in isolation. Sharp, sentiment-driven shocks of this magnitude are historically consistent with the elevated volatility typically seen ahead of US midterm elections. Bear markets do not emerge from this configuration. Bull markets absorb them.

How does the Iran conflict fit the historical pattern of energy-centric wars?

Fisher Investments identifies a consistent three-step sequence that markets follow whenever energy-centric geopolitical conflicts erupt. This pattern has repeated across decades of modern conflict. The Q1 2026 disruption is, in their view, firmly inside step two — with step three yet to arrive.

Fisher notes that $100 oil in 2026 is the real-purchasing-power equivalent of sub-$80 oil in 2019 once inflation since that date is properly accounted for — a reality largely absent from headline forecasts projecting economic calamity.

What is the US Midterm Miracle — and why does it matter for 2026 portfolios?

Among Fisher’s most distinctive theses is the “US Midterm Miracle” — a phenomenon rooted in the historical pattern of US presidential cycles. The fourth quarter of the midterm year through the first half of year three consistently ranks among the strongest periods in the cycle, characterised by above-average returns and a high frequency of gains.

The mechanism is political gridlock. As midterm elections approach, legislative activity slows. Markets, which tend to prefer a government less capable of enacting sweeping policy change, rally on this prospect. With November 2026 midterms on the horizon, Fisher expects this tailwind to crystallise in the latter half of the year — potentially amplifying what is already, in their view, an undervalued bull market.

There is a secondary dynamic: the Trump administration faces strong incentive to resolve the Iran conflict before midterms, reducing geopolitical overhang precisely as the political calendar becomes most market-friendly.

How should sophisticated investors read the current allocation picture?

Fisher’s portfolio positioning themes for the remainder of 2026 reflect a deliberate tilt toward the global opportunity set beyond US large-cap growth. The firm expects non-US equities and Value-oriented exposures to lead performance, while acknowledging that US equities and Technology remain attractive on an absolute basis.

Is Emerging Markets exposure still defensible given Middle East exposure?

This is one of the most misunderstood dimensions of the current environment. Middle Eastern markets represent less than 5% of total Emerging Markets equity capitalisation — meaning that even severe regional disruption transmits only a modest direct impact on the broader EM universe.

The evidence in the data confirms this. At March’s close, the MSCI EM Index had declined just 0.17% for the quarter — a remarkably contained drawdown given the geopolitical noise. PMI data from India (services 57.2, manufacturing 53.8), China, Taiwan, Korea, Malaysia, Indonesia and the Philippines all registered above 50 — confirming continued expansion across the EM growth engine. Fisher’s conclusion: any additional weakness that emerges would likely be sentiment-driven, not fundamental — and therefore temporary.

Key Questions Answered for Family Office Principals

Is the global bull market still intact?

Fisher Investments answers yes — emphatically. The underlying conditions that sustain bull markets (positive economic data, steep yield curve, expansionary PMIs, solid corporate earnings) remain in place. The Q1 correction was sentiment-driven, not fundamental, and therefore characteristic of a mid-cycle correction rather than the onset of a bear market.

Should we reduce oil-related or energy sector exposure?

Fisher advises caution about knee-jerk reductions. Historically, oil prices revert to pre-conflict levels well before fighting stops — typically within 6–12 months of a conflict’s onset. Furthermore, a diplomatic resolution to the Iran conflict could, paradoxically, unlock Iranian and Venezuelan reserves over time, creating long-term downward oil price pressure.

How should we interpret the tariff environment post-Supreme Court ruling?

The Supreme Court’s ruling against blanket and reciprocal tariffs has created adjustment uncertainty for the administration, but markets have largely moved on. Fisher notes that tariff news — whether positive or negative — has lost its power to materially move equity markets. The focus should be on the political calendar and monetary backdrop instead.

When does the back-end-loaded bull market acceleration begin?

Fisher expects the Midterm Miracle dynamic to crystallise in late summer through the end of 2026, as the midterm election picture becomes clearer and markets begin pricing in the legislative gridlock premium. Q4 2026 and into 2027 are historically among the strongest periods in the presidential cycle.