The first quarter of 2026 is in the books. The cautious optimism for the stock market quickly gave way to a clash between geopolitical risk management and asset rotation.

As conflict in the Middle East intensified, hopes of a rate cut turned into an anxiety about a rate hike. Inflation fears return as energy and essential goods surged. Speculative assets sold off alongside overheated commodities as highly leveraged market cashed out winners.

Winners: Energy 

The dominant catalyst was the escalation of conflict in the Middle East, culminating in the effective closure of the Strait of Hormuz — one of the world's critical commodity chokepoints.

The outcome was a massive "risk premium" across energy markets, driving one of the sharpest commodity rallies in recent history.

"Brent oil prices jumped 63% in March, the largest monthly increase in four decades. Beyond energy markets, grain prices also increased given the importance of the Strait for the passage of commodities that are critical in food production," JPMorgan analyst Zara Nokes wrote in a report.

Heating oil emerged as the standout performer, surging an extraordinary 100% during Q1. Bloomberg Intelligence Senior Commodity Strategist Mike McGlone noted that the ratio of heating oil to WTI crude reached 4.5 — an extreme level not seen since the 1980s.

Gasoline followed, with U.S. retail prices breaching the psychologically significant $ 4.00 per gallon for the first time in over 3 years.

Winners: The "Cost of Living" Surge in Eggs

Beyond energy, Q1 also saw a surge in essential food items, with eggs becoming a standout "cost of living" winner. Prices rose sharply, including a 50% month-over-month increase in March alone, reflecting tight supply conditions.

A 5.3% year-on-year decline in laying hen inventories compounded the lingering disruptions from previous avian flu outbreaks. Although Cal-Maine Foods (NASDAQ:CALM) management noted that supply conditions began to stabilize, it wasn't quickly enough to ease consumer pressure.

Owing to such prices, Cal-Maine exceeded Q1 earnings expectations. Despite declining Y/Y revenues, more stable pricing models provided a surprise. The stock is up 5% year-to-date.

Losers: Cocoa's Supply-Side Correction

In contrast, cocoa experienced a dramatic reversal. After peaking near $12,000 per ton in 2024, prices collapsed to roughly $3,000 in Q1 2026. It was a drop emblematic of a classic supply-side correction.

Confectionery News reported that improved weather conditions across key producing regions, such as the Ivory Coast and Ghana, boosted output expectations, triggering a sharp repricing.

Yet, this decline has not translated into cheaper consumer goods. Chocolate prices remained elevated, as manufacturers had locked in higher input costs months earlier – an example of the lag between commodity markets and retail pricing.

Losers: Crypto's 2018 Flashback

Cryptocurrency markets struggled, posting the worst Q1 performance since 2018. Bitcoin (CRYPTO: BTC) lost 24% while Ethereum (CRYPTO: ETH) dropped around 28%.

Rising inflation fears and shifting interest rate expectations reduced appetite for speculative assets. Yet pockets of the crypto market tied to technological growth saw outstanding returns.

Select AI-focused altcoins surged, with tokens like RIVER and QUBIC posting triple-digit gains. That outcome points to a structural rotation toward tech-led narratives, rather than a capitulation signal within the sector.

Image: Shutterstock/bangoland