Stock markets are a sea of red after President Donald Trump announced his package of sweeping trade tariffs. The FTSE 100 leading index of UK stocks was last 1.4% lower on Thursday (3 April), as traders contemplated a possible global recession.
Few had expected these ‘Trump Tariffs’ to be so severe. China’s additional tariff of 34%, for instance, now means that total US import taxes are above 50% from where they had been a few months ago.
More market weakness may lie ahead as the full economic impact of these new tariffs becomes apparent. It’s a story that could run and run if (as many expect) last night’s announcement leads to full-on worldwide trade war.
3 top FTSE stocks
Investors clearly need to consider this possible new era of protectionism when building their portfolios. It’s a challenge the global economy hasn’t faced for decades, leaving the earnings projections for swathes of stocks looking more than a little fragile.
With this in mind, here are three FTSE 100 shares I think are worth serious consideration in the current climate.
1. Coca-Cola HBC
With its focus on Africa and Europe, Coca-Cola HBC (LSE:CCH) doesn’t have to sweat about disruption from its products entering and exiting the US. In fact, its geographic footprint has been attractive to me as an investor long before the trade war threat emerged.
The drinks bottler’s products can be found in almost 30 countries, providing it with excellent diversification. What’s more, these are a mix of established, emerging and developed economies, providing a tasty blend of profits stability and growth potential.
Coca-Cola HBC could still suffer if a global boycott of US brands kicks in. However, I’m optimistic the robust brand power of its drinks (like Coke, Fanta and Schweppes) will limit any damage.
The company’s 6.8% share price rise over the past month illustrates its credentials as a lifeboat in these uncertain times.
2. National Grid
Utilities like National Grid are classic safe havens when times get tough. Electricity demand remains stable regardless of any economic, political or social challenges that come along. This will remain the case regardless of any trade war escalation.
Yet it’s important to say the company isn’t immune to risk-related tariffs. Any pick-up in inflation, and subsequent raising in interest rates by the Bank of England, would still be a drag on earnings.
But on balance I think it’s an attractive buy. And especially as the green energy transition still provides it with enormous long-term earnings potential.
3. Fresnillo
Precious metals producers like Fresnillo could be the ultimate safe-havens to consider today.
Silver and gold prices are up 28.1% and 38.6%, respectively, over the past year. And I don’t think their race is run yet, with thumping US tariffs (and the potential for heavy reciprocal action) adding to existing fears over returning inflation and global growth.
That’s not to say Fresnillo’s profits are guaranteed to blast off, given the highly challenging nature of metals mining. But its swathe of working mines across Mexico may help to reduce this risk for investors.
