It feels prefer it hasn’t been an important 12 months for the UK inventory market, largely as a result of tariff-induced worry that wiped thousands and thousands off the market in early April. Nonetheless, when wanting again, 2025 is definitely shaping out fairly nicely. Even with the April losses, the FTSE 100‘s up virtually 7% this 12 months — greater than it achieved within the first half of 2022 or 2023.

Even in 2024 — a 12 months of notable progress — it was solely up 6.7% by the point June rolled round. If the expansion continues, we may have our greatest 12 months since 2021, when Covid stimulus helped ship 15% progress.

However uncertainty nonetheless lurks among the many geopolitical corridors of the world, threatening to unravel its success. Let’s take a look at what potential occasions may ship markets spiralling once more — and how to put together.

How did we get right here?

To evaluate the place a market — or share price — is heading, first we should perceive why it’s presently the place it’s. Proper now, the UK market seems to be good — however its progress could also be constructed on a fragile basis. 

After a tricky finish to 2024, it’s probably that market individuals have already priced in mushy landings and charge cuts in 2025. Any surprising information associated to inflation, credit score modifications or geopolitical occasions may result in a pointy correction or crash.

Rate of interest surprises are a key concern, together with international debt ranges, battle escalation and the Chinese language property market. These are the areas that good buyers shall be keeping track of because the 12 months progresses.

Prepping for a fall

My outdoorsy mates love the saying: “Failing to plan is planning to fail“. Principally, earlier than wandering off into the mountains, be sure you’ve deliberate for each doable end result.

I typically consider this phrase when making my inventory picks. “Those soaring tech stocks sure look attractive. They’ll keep going up, right?”

Effectively, a few of them will — till they don’t. However some shares DO preserve regular progress, albeit at a slower tempo. These are generally known as defensive shares, and they are often life savers when all the things else is collapsing.

Unsurprisingly, under-pressure individuals are typically much less occupied with synthetic intelligence (AI) or quantum computing throughout powerful instances. But meals and medication stay in excessive demand. That’s one cause the main client staples large Unilever (LSE: ULVR) didn’t endure big losses throughout Covid.

A powerful defensive choose

Unilever’s typically hailed as among the best UK defensive shares resulting from its portfolio of well-liked manufacturers like Dove, Persil and Hellmann’s. These on a regular basis necessities are likely to take pleasure in constant demand by way of even the worst of instances, offering a buffer towards market dips. 

With operations spanning over 190 international locations, Unilever advantages from geographic diversification and publicity to rising market progress. Plus, its sturdy money circulate helps dependable dividends, making it engaging to income-focused buyers.

Nonetheless, there are dangers, together with enter price inflation, foreign money fluctuations and slower progress in some developed markets. Aggressive pressures and shifting client preferences additionally require fixed innovation. Which may be a part of the explanation why administration just lately renewed its give attention to effectivity and model energy in an purpose to enhance efficiency. 

For buyers searching for a steady, income-generating inventory with international attain and resilience by way of financial cycles, Unilever’s a stable inventory to contemplate.