US trade tariffs and the implications for UK pensions and markets

Commenting on the US trade tariffs and the implications for UK pensions and markets, Chris Arcari, Head of Capital Markets, Hymans Robertson says:

“Global growth forecasts slipped to 2.5% in March – which is still low, even relative to standards just after the 2008 global financial crisis. While a global recession is still not the base case, the risks to this forecast, and hence corporate earnings, look heavily skewed to the downside following Trump’s “Liberation Day” tariff announcements. We would urge investors to avoid knee-jerk reactions. Indeed, markets today are significantly cheaper than they were at the beginning of the year. 

“Investors should avoid making decisions based on short-term market moves. It’s important to maintain a disciplined approach to asset allocation, based on a balanced assessment of the fundamental and technical factors influencing returns and, crucially, the valuation, or risk premium, offered by a given asset. Our cautious stance on equities and credit, from the beginning of 2025, was due to global equities trading at stretched valuation multiples relative to our fair value assessments and credit spreads, which were close to historic lows. 

“Meanwhile, our constructive view on sovereign bonds was predicated on yields, which looked high relative to longer-term economic fundamentals. Indeed, more recent falls in yields will have provided a cushion against equity-market falls and credit spread widening. While cracks have started to appear in the fundamental backdrop, equity valuations are at least less stretched than they were, and credit spreads have risen from historic lows.”