Global markets have taken a sharp downturn this week following the imposition of sweeping new tariffs by the US government. As investors react to escalating trade tensions, it’s important to understand what’s driving the volatility—and how long-term investment plans should respond.
At SWP, we’ve been monitoring these developments closely, and we want to share our perspective on what’s happening, how your portfolio is positioned, and why now is a time for discipline, not panic.
What’s Going On?
Last week, the US introduced a baseline 10% tariff on imports from all countries, including the UK, with significantly higher tariffs applied to certain nations:
- EU: 20%
- China: 54% (including earlier measures)
- Vietnam: 46%
- UK: 10%
These moves, dubbed “Liberation Day Tariffs” by the US administration, were more aggressive and wide-reaching than analysts expected. The response from global markets has been swift and severe.
- The FTSE 100 dropped over 5% this morning—the largest one-day loss since early 2020
- In Asia, the Hang Seng Index fell 13% and Japan’s Nikkei dropped 8%
- US markets are poised for steep declines, with futures pointing to a 6% fall in the Nasdaq.
- Even gold, typically a safe haven, has seen outflows as investors rush to cash.
Further escalation is expected mid-week, with higher US tariffs arriving on Wednesday and China’s retaliatory 34% tariffs hitting on Thursday.
What Does It Mean for the Economy?
Our investment partners, PortfolioMetrix and Hymans Robertson, have shared early insights:
- Slower global growth, especially in export-heavy sectors.
- A short-term inflation spike in the US (potentially 1–2% higher), increasing the risk of stagflation.
- Rising odds of a US recession—some estimates place this risk above 60%.
- With inflation pressures mounting, central banks like the Federal Reserve may be slower to intervene than in previous downturns
Our Core Philosophy: Stay Disciplined
Periods like this test investors’ resolve, but they are exactly why we design portfolios with diversification, balance, and resilience in mind.
“Avoid knee-jerk reactions. We build globally diversified portfolios grounded in long-term fundamentals.”
– PortfolioMetrix
“This could be part of a broader negotiation cycle. Time in the market matters more than timing the market.”
– Hymans Robertson
Our portfolios have already benefited from:
- Reduced exposure to US equities, which have borne the brunt of the sell-off.
- Higher allocations to UK and European equities, which have held up better.
- Defensive positioning through bonds, alternatives, and quality-focused holdings.
How Portfolios Are Holding Up
Despite the headlines, most client portfolios have demonstrated resilience so far:
- Bond holdings are helping cushion equity losses.
- Regional diversification is adding value—UK and European markets are down, but less so than the US.
- Defensive assets like gold, alternatives, and high-quality companies are providing stability.
Our Ongoing Response
While we work closely with our trusted investment partners, MPA and SWP retain independent oversight of all strategies. Here’s what we’re doing right now:
- Monitoring portfolios daily
- Staying in close contact with fund managers and economists
- Ready to rebalance if needed to protect long-term objectives
The Bigger Picture: Volatility Is Normal
Though the current environment feels uncertain, market volatility is nothing new. From Brexit to COVID-19 to the global financial crisis, history has shown that investors who stay the course are typically rewarded.
We remain confident in our long-term investment approach and are here to support you through any questions or concerns.
If you’d like to discuss your portfolio or financial plan in more detail, please don’t hesitate to get in touch.
