The global markets have had a tumultuous few weeks as investors have reacted to Donald Trump’s on-off decisions on global tariffs. Beyond a stock market dip, the recent impact of the US administration’s actions on the US Dollar and Treasury bonds has created an environment where investors are increasingly looking for safe havens outside the US and in alternative assets.
A diversified portfolio, with investments spread across a variety of markets and sectors, can help insulate your holdings against market fluctuations. In the current climate, UK supported living investments offer a hedge against the uncertainty.
Stocks and shares look uncertain
Stocks and shares are always relatively volatile, but the Trump “Liberation Day” announcement of global tariffs caused a huge global sell off with investors nervous about reduced trade and a potential global recession. The markets did then rally when a 90-day partial postponement was announced, but continued tariff uncertainty amidst ongoing erratic behaviour by the leader of the free world have stopped markets returning to their previous peaks, with investors increasingly looking at alternative options.
US Dollar and Treasury Bonds under pressure
In times of stress and uncertainty, investors have traditionally looked to the US Dollar and Treasury Bonds as safe havens. However, investors have been spooked by Trump’s unpredictability, and this has created a new trading reality that Bloomberg has described as a “sell America”.
Governments sell bonds (known as “Gilts” in the UK), which are essentially government-backed IOUs, to raise money for public spending and in return pay the bond holder interest. Earlier this month, the rate the US government had to pay on its bonds rose sharply, as the price of bonds fell, which suggests investors were losing confidence in the world’s largest economy as the natural order of the post-1945 world has been called into question.
Gold on the rise
Gold has also long been perceived as a safe haven during times of crisis as investors believe that the precious metal will hold its value, and its price is not tied to the actions of the current US administration. The price of gold has been on a general upward trajectory over the last decade, but this year has seen its value hitting record levels 40% higher than where it was a year ago. As Barclays notes, gold does behave differently to other assets, which “can make it a useful diversifier when held as a small proportion of a balanced portfolio” but “the price of gold itself can be volatile”.
UK a safe haven?
After a decade of Brexit and failing discussions with the EU on trade, which has seen investors nervous about Britain, the UK is starting to look like a safe haven in the face of global uncertainty.
The UK faces its own challenges, and will be impacted by changes to global trade. However, whilst the political situations in France and Germany remain fraught and the Chinese and US economies are battered by ever-increasing tariffs, the UK, with a new government enjoying a large majority, is looking like an attractive opportunity for investors.
UK Property Market on the Rise
Outside of the stock market, UK property also appears to be having a resurgence as a potential safe haven against falling global asset prices. Investment in UK prime property is on the rise and platforms like Housemartin offer investors the opportunity to gain exposure to the UK’s resilient property market and receive a monthly income of above 7% from their investments.
A diversified portfolio has never been more important for investors to hedge their investments against the volatility of world affairs, and in the current environment UK property offers significant opportunities.