1. Trade and tariff policy: Escalation vs easing
US tariffs and export controls remain active headwinds for globally exposed sectors — especially semiconductors, autos and industrial machinery. Companies operating across politically sensitive regions continue to face pressure from higher input costs, shifting trade routes and rising uncertainty.
But the risk isn’t one-dimensional. Strategic diplomacy and sector-specific negotiations are also underway, and there’s room for targeted exemptions, tariff reversals, or bilateral deals that could offer selective relief.
In parallel, the bigger shift may be in how global supply chains are reorganising due to sustained uncertainty around trade policies. The fragmentation of trade relationships is prompting a structural pivot toward reshoring and friendshoring. Countries such as the US, Mexico, India and parts of Southeast Asia are witnessing a resurgence in investment in local manufacturing and logistics hubs. This is creating long-tail opportunities in industrials, infrastructure, and automation.
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For investors with high exposure to export-heavy or tech-centric sectors, this backdrop suggests consideration of domestic demand-led sectors (like healthcare or utilities) as a buffer. Meanwhile, longer-term themes like onshoring, US industrial revitalisation, and “friendshoring” in emerging markets may offer opportunities across industrials, factory automation, and regional infrastructure providers. Portfolios may also benefit from maintaining flexibility to re-enter global exporters if trade sentiment improves.
2. Energy policy: Fossil momentum vs green resilience
US policy continues to support fossil fuel production through tax incentives, infrastructure projects, and deregulation. Domestically, this has encouraged more drilling activity and contributed to strong revenue outlooks for certain producers. Yet, despite this policy support, energy stocks have underperformed year-to-date, potentially due to the supply glut.
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Meanwhile, clean energy remains on the policy agenda, particularly in Europe and parts of Asia. Green infrastructure spending, electrification and carbon transition mandates are ongoing, even if short-term sentiment has softened due to subsidy rollbacks or cost inflation.
The energy market is caught between near-term policy momentum and long-term structural transition. While fossil fuel producers may benefit from policy tailwinds, weak pricing is a headwind. Green energy exposures are supported by structural investment flows, but can be volatile due to changes in regulations or market sentiment. Investors may consider spreading their exposure across traditional energy and transition-oriented assets, such as grid infrastructure, renewable energy developers and clean tech supply chains, to reflect both near-term headwinds and long-term opportunities.
3. Fed independence and interest rate risk: Political pressure vs economic signals
The Federal Reserve is walking a tightrope. On one hand, hard data, particularly labour market strength and consumer spending, continue to support a cautious approach to rate cuts even as soft data, such as business sentiment and manufacturing surveys, have begun to weaken. This hints that the policy may already be restrictive enough.
Layered on top of this is growing political pressure to ease monetary policy. Emerging talk of a “shadow Fed chair” — a presidential appointee who could influence the Fed from the sidelines — has raised concerns about whether upcoming rate decisions will remain data-dependent or lean toward populist agendas.
This dual reality between economic caution and political influence leaves markets grappling with whether cuts are a response to economic weakness or political expediency.
Rate-sensitive exposures, such as long-duration bonds, tech and REITs, may face swings as markets try to separate economic reality from political intent. Some investors are looking to floating-rate bonds and short-duration debt to reduce duration risk.
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Real assets, including infrastructure and commodities, can offer inflation-linked protection. Gold, in particular, is experiencing renewed interest, not just as an inflation hedge, but also as a hedge against geopolitical and monetary credibility risks in an environment where central bank independence is being questioned.
4. Geopolitics: Tensions vs realignment
Geopolitical flashpoints continue to shape global risk, whether through military conflict, trade decoupling or reshoring of manufacturing. But there’s also a quieter shift underway: global capital is realigning around new blocs (Brics+, energy alliances, defence coalitions), creating fresh channels for flows and investment.
This evolving mix of confrontation and recalibration is fragmenting the global investment landscape, prompting investors to reassess traditional risk havens and regional exposures.
Some investors may look beyond traditional safe havens to hedge geopolitical risk — defence stocks, strategic minerals and gold are increasingly seen as geopolitical proxies.
Infrastructure, commodity exporters, and neutral-aligned economies may also benefit from the reshuffling of trade routes and capital flows.
5. Economic momentum: US growth resilience vs global rotation
The US economy continues to surprise with its resilience. Labour markets remain tight, consumer spending is holding up and services demand is proving sticky. Earnings revisions have been modestly positive and GDP growth projections have been nudging higher.
Still, signs of soft-landing fatigue are emerging. Business investment is showing cracks, housing activity is softening and sentiment data has turned more cautious. Some sectors are feeling the long-term drag of higher interest rates and consumers may be approaching a spending ceiling amid dwindling pandemic-era savings.
At the same time, global growth is showing more dispersion. Europe is stabilising, China is recovering in fits and starts, and emerging markets are benefiting from a weaker dollar and strong commodity demand, but momentum remains uneven.
For investors, this means staying agile as growth dynamics evolve. Cyclical exposures that rode the US resilience wave may face headwinds if spreads soften. Some are looking to balance cyclical sectors with defensives, while also exploring opportunities in regions where growth is just beginning to turn, such as select parts of Europe and Asia. Portfolios tilted toward growth-heavy US assets may benefit from rebalancing toward a more diversified global theme.
6. AI and tech: Innovation tailwind vs regulatory and valuation risks
The artificial intelligence (AI) boom has been a dominant market force, driving outsized returns in US mega-cap tech. Advances in generative AI, cloud computing and semiconductors have underpinned a productivity narrative that’s pulling forward earnings expectations and valuations.
Yet this rally also comes with risks. The leadership is narrow, with returns concentrated in a handful of names. Regulatory scrutiny is increasing, particularly in areas such as competition, data privacy, and platform dominance. Global rivals, particularly in China and Europe, are also ramping up their investments and forming alternative tech ecosystems.
This duality creates a unique challenge: while the AI theme remains compelling, concentrated exposure may introduce fragility if regulatory or macro headwinds emerge.
Investors may consider broadening their tech exposure across the full AI value chain, from infrastructure and chipmakers to industrial automation and global software platforms.
Diversification across geographies and company sizes may also help mitigate the risks of crowding and policy shocks, while preserving the upside from the secular innovation trend.
7. Fiscal policy and debt: Ballooning borrowing vs credibility risk
Fiscal policy is back in the spotlight as the Trump administration pursues a sweeping tax-and-spend agenda. Infrastructure, defence, and industrial subsidies are receiving bipartisan backing, while the new Department of Government Efficiency (DOGE) is aiming to offset costs through targeted spending cuts.
Still, the US deficit remains large — near 6% of GDP — and public debt is projected to exceed US$36 trillion ($46.23 trillion). Bond markets are starting to reflect higher term premiums, as investors question how long the fiscal expansion can persist without stoking inflation.
This backdrop presents a two-way risk. On one side, fiscal stimulus could extend the growth cycle and support cyclical sectors. On the other hand, unchecked borrowing may trigger renewed inflation pressure or yield curve steepening, weighing on long-duration assets.
Some investors are watching fiscal-sensitive segments, such as US Treasuries, infrastructure and defence contractors, for signs of regime shifts. Shorter-duration debt, inflation-linked bonds, and gold are also gaining attention as potential hedges in a world where fiscal dominance becomes a market narrative.
A new playbook for a fragmented world
The global macro environment is not shaped by one dominant theme, but by a patchwork of competing forces. Tariffs may be tightened or rolled back. The Fed may lose its independence or be forced to cut rates. AI could propel productivity or hit regulatory roadblocks. This era of risk dispersion calls for a fresh approach to portfolio construction.
Rather than diversifying only by asset class or region, investors are increasingly thinking in terms of exposure to risk drivers, building portfolios that can adapt to volatility in interest rates, policy shifts, geopolitical fragmentation, or technological disruption.
This isn’t about predicting the next shock. It’s about being prepared for both the upside and downside of multiple, uncorrelated risks.
Charu Chanana is the chief investment strategist at Saxo
