As Global Markets Recover, Which UK Stocks Have Benefited the Most?
Hopes of a UK-US trade deal have recently lifted market sentiment. UK Chancellor Rachel Reeves is currently engaged in a trade mission to Washington, aiming to secure a beneficial agreement with the US administration.
UK stock indexes have responded positively, with the Morningstar UK Index showing a rise of 3.59% in sterling terms for the year to date. Similarly, the FTSE 100 has witnessed an approximate increase of 1% in 2025 so far.
While the recovery is still in its nascent stage, distinct patterns have emerged, especially among sectors that have rebounded in the past week. Notably, financials, basic materials, and real estate stocks, which experienced significant setbacks earlier this month, have been pivotal in driving positive returns over a one-week period. Meanwhile, technology and basic materials continue to face challenges, remaining in negative territory for the year.
Initially, financial stocks were sold off due to apprehensions that Trump’s tariffs could spell the end of globalization, leading to a global recession and subsequent interest rate cuts affecting profit margins.
Asia-focused banks, such as HSBC HSBA and Standard Chartered STAN, were severely impacted in the April selloff following severe tariffs imposed on China and parts of Southeast Asia. However, HSBC and Standard Chartered shares have risen by 7% over the past five days. Despite the April downturn, both stocks are now in positive territory for the year.
Barclays BARC, with a 32.2% exposure to US sales, has seen its share price rebound following the tariff-induced shock. Its shares have climbed by around 6% in the last five days. Like HSBC and Standard Chartered, Barclays is up for the year despite the initial setbacks in April.
Following the banks, the basic materials sector observed an increase of 3.72%, spearheaded by Chilean-based copper miner Antofagasta ANTO, which jumped 8.96% over one week. Copper remains a crucial indicator of global economic health and a proxy for Chinese growth.
Further gains were recorded by Rio Tinto RIO, which rose by 5.34%, surpassing competitors such as Anglo American AAL and the undervalued Glencore.
The UK real estate sector emerged as the third-best performer over a one-week period. Being largely domestic players, UK housebuilders like Persimmon PSN are relatively insulated from global tariffs, though not completely immune to global economic impacts. According to market metrics, Persimmon and Taylor Wimpey TW. are considerably undervalued stocks. Over the week, Persimmon recorded a gain of 3.33%, while Taylor Wimpey increased by 5.81%.
Lewis Grant, a senior portfolio manager for Global Equities at Federated Hermes, argues that Europe’s stability and what was once considered its “boring” nature now provide a reassuring presence in the current market environment. He notes that the narrative is supported by the attractive relative valuations of European stocks, despite the underlying reasons for their discounted prices. He asserts that Europe is a “stability for cheap” opportunity and expects global investors to continue channeling funds into European markets as long as this scenario remains.
Despite prevailing optimism, Bank of England Governor Andrew Bailey has cautioned that the ongoing trade war could still impact global growth, thereby affecting the UK. He warned at the Global Outlook Forum in Washington that fragmenting the world economy could hinder growth.
Though the UK has a lower tariff rate compared to some other nations, its service-oriented economy is particularly sensitive to international developments. The UK stock market’s international exposure is extensive, as evidenced by major stocks such as pharmaceutical giant AstraZeneca AZN, oil giant Shell SHEL, and Asia-focused bank HSBC HSBA, which hold significant weight in both the Morningstar UK Index and the FTSE 100.
While the UK Chancellor has suggested that the US is eager to finalize a deal with the UK, investors remain vigilant because the tariffs are currently paused for just 90 days. April has already yielded several surprises, and as ECB President Christine Lagarde noted on April 17, the uncertainty is far from being resolved.
Upcoming earnings announcements also have the potential to sway market sentiment. HSBC will reveal its earnings on April 25, closely followed by AstraZeneca on April 29, and Shell on May 2.
