What do President Trump’s tariffs and the emergence of DeepSeek have in common? The two incidents have had a major impact on global financial markets in 2025, fuelling widespread uncertainty as investors reassessed their portfolios in response to escalating geopolitical and technological risks. Nevertheless, although DeepSeek trigged one of the sharpest single-day sell-offs in tech history, its impact was brief. Meanwhile, the repercussions from the tariffs are ongoing.
The market volatility caused by such incidents has left many traders concerned and hesitant to invest their money in stocks and shares, which could tumble based on actions out of their control. In this kind of scenario, it is vital that investors are aware of global events, what potential impacts they may have, and how to strengthen their position.
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Global events
When DeepSeek, a Chinese artificial intelligence (AI) start-up, came to the fore in January 2025, shockwaves reverberated throughout the financial markets; DeepSeek rivalled the performance of Nvidia-supported systems at a fraction of the price. In fact, Nvidia lost nearly $600bn in market capitalisation in the immediate aftermath. While the tech giant has since bounced back – becoming the first company in the world to reach a market value of $4tn – this situation made investors very conscious of the potential losses that can be brought about by emerging technologies and events.
It would be remiss not to mention the main economic story of 2025 so far – tariffs. US President Donald Trump has introduced and threatened a seemingly endless list of tariffs on almost every country in the world, understandably shaking the global economy. Companies are feeling the full effects of these tariffs, with sportswear giant Nike admitting President Trump’s duties on key trading partners could add $1bn to its costs.
Stock markets too have felt the full force of the introduction of tariffs. In April the S&P 500 saw more than 10% of its value wiped out over the course of three days; but when a rumour that the White House was considering delaying the measures, shares surged more than seven percent in a matter of minutes. The effects have not just been restricted to the US, with both European and Asian markets also seeing stocks plunge initially, with the latter described as a bloodbath. This emphasises the levels of volatility that Trump’s tariffs have had globally.
The introduction and threats of tariffs has been a volatile exercise in itself, with President Trump regularly threatening to impose these on nations, only to then delay them, or even change his mind altogether. This instability has only added further in disrupting the global financial markets.
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By GlobalDataIf 2025 has taught investors anything so far, it’s that the age of turbulence is well and truly here. During such periods of market volatility, it’s easy to focus on the areas of the market which are falling. But often, the most interesting stories concern what’s rising. As the financial world continues facing pressures related to tariffs, inflation, and global uncertainty, several assets, sectors, and stocks defy the downward trend – offering sharp-eyed investors new opportunities.
Navigating volatility
One approach that investors ought to take during times of volatility is to look toward so-called safe haven assets. These assets are described this way because, during times of economic trouble, they tend to either maintain or increase in value. Investors often turn to them to preserve or grow their wealth, with gold being one of the best examples. In fact, in April, the concerns around a trade war and the weakening of the US dollar saw gold hit $3,500 an ounce – an all-time record.
Gold isn’t the only safe haven asset traders should consider investing in. Government bonds are seen as relatively risk free, particularly when issued by stable, developed countries, as it is highly unlikely that those governments will default on their debt. Currencies are also often viewed in this light. However, given the events of the previous year, the dollar has been subject to a period of volatility. During this time, the Japanese Yen and Swiss Franc have strengthened, supporting their position as traditional go-to currencies during times of market turbulence.
Investors may also want to turn to defensive stocks, such as those in the utilities, consumer staples and healthcare sectors. While not entirely risk-free, these industries tend to have a stable demand, which makes their earnings more predictable and less susceptible to the effects of sharp market fluctuations.
Cryptocurrencies, and in particular Bitcoin, held up remarkably well in wake of the tariffs. Although down 26% from recent highs, it does seem to have shown some surprising resilience, which supports its potential position as a hedge against traditional market turmoil. While calling it a safe haven asset seems premature, given its association with regular price fluctuations, its recent performance suggests it may play a stabilising role in times of economic stress.
The importance of a diversified portfolio
During unstable periods, the most important thing investors can do is diversify their portfolios. This is a core principle of managing risk. It is crucial that investors spread their investments across different assets, sectors or even geographical locations. This ensures that if one area of the market suffers substantial losses, traders reduce their total losses and preserve their wealth. Diversification also has the potential to offset losses – as one asset falls in value, others could rise.
This is by no means a complete solution for avoiding risk; rather, it acts more like a shock absorber. Diversification helps investors manage their portfolios more effectively, particularly during periods of volatility. By spreading risk, it provides a more stable foundation and can help protect long-term goals from being derailed by sudden global events.
Sensible investing is the key
While trying to predict global events is inherently uncertain, being prepared and sensible is key for investors looking to future-proof their portfolios. Whether it’s diversifying across stocks, or investing in safe haven assets like gold, investors should maintain sensibility to help cushion the impact of future market events, like those we’ve seen in 2025.
Kate Leaman, chief market analyst, AvaTrade
