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The FTSE 100 and FTSE 250 moved sharply downwards on Thursday (3 April). The strikes mark a response to new US tariffs, not simply these imposed on the UK, however globally.
That’s as a result of the UK’s largest-listed firms produce and function globally, and never simply within the UK. What’s extra, this downward motion in shares is nothing in comparison with what we’re seeing within the US the place pre-market exercise signifies one thing of a selloff.
So the place may buyers discover security within the UK market? Listed below are two concepts to contemplate.
Jet2
Jet2 (LSE:JET2) shares seem extremely undervalued, buying and selling at simply 0.85 EV-to-EBITDA, a determine that highlights the disconnect between its valuation and operational power. Not like many airways, Jet2 advantages from a strong web money place of £2.3bn, which is projected to develop to £2.7bn by 2027.
This liquidity gives a stable basis for strategic investments and shields the corporate from macroeconomic shocks, together with tariff dangers, which Jet2 has minimal publicity to.
The airline’s plan to exchange and increase its fleet is formidable but manageable, with annual capital expenditure of £833m aligning with business norms at 11.4% of income for 2025. This ratio is anticipated to say no additional as income grows to £8.6bn by 2027.
Jet2’s fleet alternative technique focuses on operational effectivity, with newer Airbus A321neo plane providing decrease gas consumption and better capability, which may enhance margins in the long term. Within the quick run nevertheless, we may see additional downward stress on oil and jet gas costs following Trump’s tariffs.
There are dangers. This consists of the impression of upper Nationwide Insurance coverage contributions, Minimal Wage development, and elevated touchdown charges. Nevertheless, Jet2’s earnings are forecasted to develop steadily, with EPS growing from £1.83 in 2025 to £2.08 in 2027.
For me, Jet2’s mixture of money power and development forecasts supply a point of security from the volatility. It’s additionally very low-cost. That’s why I’m seeking to high up.
AstraZeneca
AstraZeneca (LSE:AZN) — the most important firm on the FTSE 100 — has emerged as a possible secure haven amid the fallout from Trump’s sweeping tariffs. In line with a clarifying truth sheet from the White Home, medicine imported into the US seem exempt from higher-rate reciprocal tariffs. This gives reduction to pharmaceutical corporations like AstraZeneca and GSK.
Whereas uncertainty stays over whether or not the broader 10% baseline tariff may apply, AstraZeneca’s sturdy monetary place and international pipeline recommend resilience. The corporate has reassured buyers it’s actively assessing the implications of the announcement however expects important medicines to stay exempt.
AstraZeneca carried out nicely in 2024, and its formidable pipeline of latest medicines and transformative applied sciences positions it for sustained development, concentrating on $80bn in income by 2030. With no fast tariff publicity and a catalyst-rich 12 months forward, AstraZeneca gives stability in turbulent markets.
Nevertheless, it’s price remembering that drug discovery is an costly enterprise, and lots of pipeline candidates by no means make it to market. What’s extra, it’s barely dearer than a few of its friends on a near-term foundation. If earnings development doesn’t materialise, the inventory may pullback. Nonetheless, it’s one I’m topping up on.
