Following Donald Trump’s sweeping tariffs on US imports, the global financial markets are facing extreme volatility, with share prices down across the globe.
Will the UK become a safe haven for investors?
Amidst global volatility, the UK is emerging as a safe haven for investors seeking stability and reliable, less volatile assets to protect their portfolios. The FT are reporting that a number of leading UK wealth managers are fielding increasing enquiries from US clients “…looking to move a greater portion of their wealth to the UK…” (https://www.ft.com/content/5cbfdd0d-8169-4465-a42b-a9fe8a090a71).
The shift towards fixed income assets
In uncertain times, it is typical that investors seek to unload their riskier assets and move capital into safer options, such as gold. But following last week’s tariff announcement, even gold is steadily falling, hinting that investor are dumping anything they can sell to make up for the losses they have faced so far.
Investors are prioritising safety over growth, focusing on assets that offer more predictability amid rising recession risks. This can be seen with treasuries on the rise and investors looking to fixed income funds instead of trying to time the markets.
Private credit: The asset class of stability
Among the available asset classes, we predict that private credit will stand out as a key source of stability in these uncertain times.
With stock markets in freefall and bond yields still attractive, private credit remains a compelling option for investors seeking strong returns with minimized risk.
Thanks to its solid fundamentals and relatively low exposure to market swings, private credit has proven to be one of the most resilient sectors in the current financial landscape.
Global stock market decline and the bond rally
As previously mentioned, global stock markets have taken a significant hit in recent days. U.S. tariffs and recession fears have sparked widespread sell-offs, with major indices like the S&P 500 and Dow Jones seeing substantial losses.
Last week, the pan-European Stoxx 600 index recorded its worst weekly performance in five years, underscoring the extent of the global market downturn. S&P 500 futures shed 1.8% with the benchmark nearing bear market territory when official trading begins. It closed Friday down 17.4% from its closing record touched in February. Dow Jones Industrial average futures fell 661 points, or 1.7%. Nasdaq-100 futures lost 2.3%.
This morning, the Stoxx 600 dropped to a low of 6.2%, with all sectors and major bourses suffering severe losses. The Hang Seng in Hong Kong plunged over 12%, marking its worst day since 1997 as panic selling gripped Chinese markets.
The FTSE 100 dropped as much as 6.3%, hitting a one-year low.
Amid these stock market declines, bond markets have seen a rally, offering much-needed relief for investors seeking to hedge against further equity losses. This shift to bonds reflects growing expectations of an economic slowdown and potential interest rate cuts by the Federal Reserve.
The ongoing impact on the British Pound
The dramatic shifts in global stock markets have also impacted currency markets, with the British Pound experiencing notable volatility. As global equities tumbled, the GBP/USD pair fluctuated sharply, reflecting investor sentiment.
Despite these swings, the Pound has remained relatively stable, further reinforcing the UK’s appeal as a secure investment destination.
Conclusion: Positioning for stability in a turbulent market
As market conditions continue to evolve, investors should consider alternative asset classes like fixed income and private credit, which offer resilience during periods of economic uncertainty.
With the global economy facing growing risks, particularly from tariff policies, the need for a balanced and diversified portfolio has never been more crucial.