Liberation Day shock

Lale Akoner, Global Markets Analyst at Investment Platform eToro discusses the fallout and opportunities from President Trump’s ‘liberation day’

Defensive is the new offence

“After the tariff bombshell, a clear trend emerged: rotation into defensive sectors and away from trade-sensitive cyclicals. In Europe, traditionally “boring” plays like utilities, real estate, and defence stocks suddenly became stars as tariff jitters set in. Conversely, sectors tied to global trade took a hit – luxury goods, banks, and industrials slumped, and tech shares wobbled.

“Not everyone is fleeing growth entirely, but there’s a newfound pickiness. Some favour services over goods in consumer plays and cash-rich large caps over fragile small caps. In other words, quality and resilience are the name of the game. And gold is gleaming again – both as a diversifier and recession hedge.

Rethinking the map

“The tariff shock has upended regional preferences too. US equities, once stalwart, suddenly look shakier on growth fears. Many investors think that “Liberation Day” will probably not represent the short-term bottom for US equities.

“The UK, hit with a milder 10% tariff, has shown resilience. London’s FTSE fell less than continental indexes. Some even think Britain might snag a competitive edge – goods made in the UK face lower US tariffs than EU-made ones, potentially encouraging a bit of reshoring of production.

“Europe, despite facing a hefty 20% US tariff, isn’t being abandoned – the EU has both the clout and policy tools to buffer the impact. Meanwhile, emerging Asia has been largely put in the penalty box, with key Asian economies facing 30%+ tariffs. For UK and European investors, staying closer to home feels safer for now.

Dashing for cover in safe havens

“In the immediate aftermath, risk-off sentiment spiked. Global stocks plunged and investors dashed for cover in safe havens like bonds, gold, and the Japanese yen. Government bond yields slid as prices jumped, and oil prices slumped on fears of a trade-induced slowdown.

“Notably, the US dollar fell instead of strengthening, as markets wagered the Fed will have to counteract the growth hit. The euro and even the pound firmed against the greenback amid the turmoil.

“Investors in Europe and the UK are hunkering down, leaning into defense and trimming exposure to the eye of the storm. There’s cautious hope a negotiated truce will emerge – but no one’s betting on it yet. For now, portfolios are stocking up on quality names plus extra cash, bonds and gold for safety. It’s the classic “hope for the best, hedge for the worst” playbook as the dust settles from Liberation Day.”