Pandemic-era shortages and rising geopolitical tensions have seen more countries turning inwards and focusing on their economic resilience and national security. All three of the world’s largest trading regions – the US, China and the EU – are pursuing policies to diversify the sources of their imports, both as a hedge against potential supply disruptions and to reduce vulnerability to geopolitical uncertainty. In this context, the Trump administration’s latest tariffs are just symptomatic of a more general fracturing of the global economy and increased emphasis on self-sufficiency, particularly in strategic sectors such as Defense, Technology and Healthcare.

That said, while China and the US have continued to decouple, the world has grown increasingly more dependent on China and less dependent on the US in the past 25 years, according to IMF data. China’s growing importance in the world economy is reflected in its increasing share of global trade, both as an exporter and importer, and dominance in global supply chains. In turn, many countries rely on China as a key export market and source of imports.

With the Trump administration pursuing a more confrontational trade policy towards the rest of the world and China increasingly being seen as a “systemic rival”,5 we think that most countries will double down efforts to diversify their supply chains, boost domestic production, and build strategic stockpiles. However, limited fiscal space might make such efforts increasingly difficult, especially given higher defense expense needs. Balancing economic and national security concerns with the need for open trade and cooperation is likely to remain a key challenge, with significant implications for long-term investing, in our view.

Market Themes

High valuations, trade uncertainty and geopolitical concerns warrant a more cautious asset allocation until year end, in our view. We are neutral on equities, underweight credit and overweight rates in the medium term. Given heightened policy risk in the US, we expect continued outperformance of Developed Markets ex US equities and favor high income solutions.

Base Case

Our central scenario is one in which US trade policy uncertainty continues to subside and recent geopolitical risks ultimately moderate, allowing inflation to stabilize and central banks to cut rates a little further. This would be supportive of risk assets globally, but downside risks remain elevated, warranting a more cautious approach. While the global economy may be less sensitive to oil prices than in past cycles, it is not immune. Uncertainty and energy price volatility, combined with the ongoing tariff shock, could still weigh on global growth. Overall, the recent escalation in geopolitical tensions adds to the risks facing the global economy.

Global Trade & Geopolitical De-escalation (Negative Inflation, Positive Growth)

A scenario where tariffs are reduced substantially or even removed entirely, and geopolitical concerns surrounding the Middle East dissipate, would be positive for global growth and disinflationary in the US. This would support risk assets globally and allow faster Fed cuts which would be welcomed by bond investors. That said, long-duration treasuries could remain volatile as lower tariffs reduce revenues and pressure public finances.

Key Implications

We believe investors can position for such a scenario by considering cyclical sectors, particularly those exposed to US tariffs such as autos, and global fixed income.

US Stagflation (Positive Inflation, Resilient Growth)

While not our base case scenario, inflation expectations could move sharply if tariffs were to be entirely passed on to consumers or geopolitical events drive energy prices considerably higher for an extended period of time, affecting their consumption habits and wage demands. While the reduction in trade uncertainty would see growth stabilize at below potential levels, the de-anchoring of inflation expectations could lead to a more permanent inflationary shock. In the event, the Fed would likely pause for longer, perhaps until 2026, and the risk of a rate hike would increase.

Key Implications

In our view, the best tactical inflation hedges in such a scenario would be non-traditional diversifiers like gold, trend-following hedge funds or private assets. That said, investors can also adjust their core exposure by favoring the short-end of the curve within fixed income, and high-dividend stocks within equities.

US Recession (Negative Inflation, Negative Growth)

In the event of a global tariff escalation, both consumers and businesses in the US would be hit hard, with a rise in the unemployment rate and a freeze in domestic investment pushing the US economy into a recession. While higher tariffs may lead to a jump in inflation at first, the weakening in aggregate demand and the labor market would ultimately dominate, easing inflationary pressures and allowing the Fed to cut rates more sharply.

Key Implications

Investors may consider pivoting to more defensive and dividend-paying stocks, extending duration by increasing exposure to government bonds and adding alternatives, such as multi-strategy hedge funds or gold.

Global Equities

OUTLOOK

Mitigating Regional Concentration

In an environment where the long-standing dominance of US equities is being reassessed, many investors are increasingly scrutinizing their equity allocations. The US now commands over 70% of the MSCI World index, which came at the expense of other developed peers like Europe and Japan. While this surge reflects superior US corporate earnings and tech-sector dominance, it also raises concerns about portfolio concentration risk. The mean reversion potential and structural shifts in global growth and policy regimes make a timely case for broader diversification into ex-US equities, in our view. As valuations outside the US appear more attractive, and monetary and fiscal dynamics evolve across regions, the marginal benefit of holding an overweight position in US equities is likely to diminish. We believe that investors should consider the long-term benefits of regional diversification, not just for risk mitigation purposes, but also given the potential upside in under-owned markets that are poised for recovery and structural re-rating.

Finding Value and Diversification in Global Equities

The growth gap between the US and other regions is likely to narrow in the medium term, potentially making non-US markets, including EM equities, more attractive. While tariffs might weigh on growth in Europe and China in 2025, a shift towards more fiscal stimulus may partly cushion the impact and boost potential growth in the years to come, making those markets more attractive. Additionally, ongoing pressure on the US dollar could dimmish the appeal of US assets for non-US investors. Looking at valuations, while they have expanded over recent months, Chinese, European and Japanese equities continue to be cheaper than US stocks, with P/E ratios of approximately 11.2, 14.7 and 16.0, compared to 22.3 for the US.6 From a correlation standpoint, Chinese and Indian equities exhibit lower correlations to US equities, which strengthens the case for regional diversification.

SOLUTIONS

Exchange-traded funds (ETFs) offer investors a variety of strategies to prepare for whatever the market throws at them – a stock market sell-off, Federal Reserve moves, policy uncertainty, economic instability and just about everything else under the sun.

We kept all these factors in mind as we built this list of the best ETFs to buy now.

Overall, the stock and bond markets have done well in the past 12 months or so, thanks to stabilizing inflation, rate-cut excitement and demand for all things artificial intelligence (AI).

And while uncertainty over what President Donald Trump’s tariff policies could have on economic growth and inflation had stocks careening toward bear-market territory, signs of progress on the trade front have sparked a big bounce.

The pace of the stock market’s rebound has some concerned. It “has gone way beyond the pause that refreshes, with investors behaving almost as if the trade war is over and done,” says Douglas Porter, chief economist at BMO Capital Markets. “While the trade news is no doubt less awful, it’s still far from reassuring.”

And now we confront the prospect of actual war in the Middle East between Israel and Iran as well as the potential for a wider and extended conflict.

Folks worried about more uncertainty going forward should consider focusing on high-quality stocks or bonds.

Indeed, “quality companies have lost less and recovered faster during periods associated with market falls and deteriorating economic conditions,” writes Cameron McCormack, portfolio manager at VanEck ETFs Australia.

And investing in ETFs loaded with strong companies that have proven their ability to navigate an uncertain market makes sense because they spread risk across a basket of stocks.

How do you choose the best ETFs to buy?

Today, we’re going to take a look at five of the best ETFs to buy now. This, of course, raises questions about what exactly defines a strong ETF and where we should look for them.

To start, it’s generally a good idea to stick to broad-based ETFs. You don’t have to put your entire portfolio in an S&P 500 index fund , though doing so isn’t necessarily a bad idea, particularly if your account is modest in size, and diversification is difficult.

Sector ETFs and highly specialized single-strategy ETFs can add value under the right circumstances, and you might have reasons for wanting targeted exposure.

But it makes sense to keep those positions relatively small while leaving the bulk of your portfolio in more diversified ETFs.

Costs are also a consideration. It’s not going to have a major impact on your long-term returns if you hold an ETF with an expense ratio of 0.08% vs one that costs 0.10%.

Once you reach a certain low-cost threshold, it doesn’t move the needle all that much to lower fees by an extra basis point. (A basis point equals 0.01%.) But every dollar you pay in fees is a dollar you no longer have available to grow and compound.

This commentary was prepared June 2025 and represents the opinion of U.S. Bank. The views are subject to change at any time based on market or other conditions and are not intended to be a forecast of future events or guarantee of future results and are not intended to provide specific advice or to be construed as an offering of securities or recommendation to invest. Not for use as a primary basis of investment decisions. Not to be construed to meet the needs of any particular investor. Not a representation or solicitation or an offer to sell/buy any security. Investors should consult with their investment professional for advice concerning their particular situation. The factual information provided has been obtained from sources believed to be reliable but is not guaranteed as to accuracy or completeness. Any organizations mentioned in this commentary are not affiliated or associated with U.S. Bank in any way.

U.S. Bank and its representatives do not provide tax or legal advice. Your tax and financial situation is unique. You should consult your tax and/or legal advisor for advice and information concerning your particular situation.

Diversification and asset allocation do not guarantee returns or protect against losses. Based on our strategic approach to creating diversified portfolios, guidelines are in place concerning the construction of portfolios and how investments should be allocated to specific asset classes based on client goals, objectives and tolerance for risk. Not all recommended asset classes will be suitable for every portfolio.

Past performance is no guarantee of future results. All performance data, while deemed obtained from reliable sources, are not guaranteed for accuracy. Indexes shown are unmanaged and are not available for investment. The S&P 500 Index is an unmanaged, capitalization-weighted index of 500 widely traded stocks that are considered to represent the performance of the stock market in general. The MSCI All Country World Index (MSCI ACWI) is designed to measure the equity market performance of developed and emerging markets.

Equity securities are subject to stock market fluctuations that occur in response to economic and business developments. International investing involves special risks, including foreign taxation, currency risks, risks associated with possible difference in financial standards and other risks associated with future political and economic developments. Investing in emerging markets may involve greater risks than investing in more developed countries. In addition, concentration of investments in a single region may result in greater volatility. Investing in fixed income securities is subject to various risks, including changes in interest rates, credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications, and other factors. Investments in debt securities typically decrease in value when interest rates rise. The risk is usually greater for longer-term debt securities. Investments in lower-rated and non-rated securities present a greater risk of loss to principal and interest than higher-rated securities. Investments in high yield bonds offer the potential for high current income and attractive total return but involve certain risks. Changes in economic conditions or other circumstances may adversely affect a bond issuer’s ability to make principal and interest payments. The municipal bond market is volatile and can be significantly affected by adverse tax, legislative or political changes and the financial condition of the issuers of municipal securities. Interest rate increases can cause the price of a bond to decrease. Income on municipal bonds is free from federal taxes but may be subject to the federal alternative minimum tax (AMT), state and local taxes. There are special risks associated with investments in real assets such as commodities and real estate securities. For commodities, risks may include market price fluctuations, regulatory changes, interest rate changes, credit risk, economic changes and the impact of adverse political or financial factors. Investments in real estate securities can be subject to fluctuations in the value of the underlying properties, the effect of economic conditions on real estate values, changes in interest rates and risks related to renting properties (such as rental defaults). Hedge funds are speculative and involve a high degree of risk. An investment in a hedge fund involves a substantially more complicated set of risk factors than traditional investments in stocks or bonds, including the risks of using derivatives, leverage and short sales, which can magnify potential losses or gains. Restrictions exist on the ability to redeem or transfer interests in a fund. Private capital investment funds are speculative and involve a higher degree of risk. These investments usually involve a substantially more complicated set of investment strategies than traditional investments in stocks or bonds, including the risks of using derivatives, leverage, and short sales, which can magnify potential losses or gains. Always refer to a Fund’s most current offering documents for a more thorough discussion of risks and other specific characteristics associated with investing in private capital and impact investment funds. Reinsurance allocations made to insurance-linked securities (ILS) are financial instruments whose performance is determined by insurance loss events primarily driven by weather-related and other natural catastrophes (such as hurricanes and earthquakes). These events are typically low-frequency but high-severity occurrences. Private equity investments provide investors and funds the potential to invest directly into private companies or participate in buyouts of public companies that result in a delisting of the public equity. Investors considering an investment in private equity must be fully aware that these investments are illiquid by nature, typically represent a long-term binding commitment and are not readily marketable. The valuation procedures for these holdings are often subjective in nature. Private debt investments may be either direct or indirect and are subject to significant risks, including the possibility of default, limited liquidity and the infrequent availability of independent credit ratings for private companies.

©2025 U.S. Bancorp

As European markets experience a modest uptick, buoyed by a ceasefire in the Middle East and easing trade tensions, investors are eyeing dividend stocks as a potential source of steady income amidst economic uncertainty. In this environment, selecting dividend stocks with robust yields can offer an attractive balance between risk and reward, providing investors with regular income while navigating the fluctuating market landscape.

Top 10 Dividend Stocks In Europe

Name Dividend Yield Dividend Rating Zurich Insurance Group (SWX:ZURN) 4.43% ★★★★★★ Rubis (ENXTPA:RUI) 7.39% ★★★★★★ OVB Holding (XTRA:O4B) 4.59% ★★★★★★ Les Docks des Pétroles d’Ambès -SA (ENXTPA:DPAM) 5.73% ★★★★★★ Julius Bär Gruppe (SWX:BAER) 4.87% ★★★★★★ Holcim (SWX:HOLN) 5.31% ★★★★★★ ERG (BIT:ERG) 5.31% ★★★★★★ Bredband2 i Skandinavien (OM:BRE2) 3.93% ★★★★★★ Banque Cantonale Vaudoise (SWX:BCVN) 4.79% ★★★★★★ Allianz (XTRA:ALV) 4.49% ★★★★★★

Click here to see the full list of 237 stocks from our Top European Dividend Stocks screener.

Let’s uncover some gems from our specialized screener.

Simply Wall St Dividend Rating: ★★★★☆☆

Overview: Bravida Holding AB (publ) offers technical services and installations for buildings and industrial facilities across Sweden, Norway, Denmark, and Finland, with a market cap of SEK19.63 billion.

Operations: Bravida Holding AB (publ) generates revenue through its provision of technical services and installations for buildings and industrial facilities in Sweden, Norway, Denmark, and Finland.

Dividend Yield: 3.9%

Bravida Holding’s dividends are well-supported by both earnings and cash flows, with a payout ratio of 70.8% and a cash payout ratio of 44.5%. Although the company has only paid dividends for nine years, they have been stable with minimal volatility. Recent Q1 results showed increased net income to SEK 227 million despite a slight sales decline. Additionally, Bravida’s commitment to emission reduction targets aligns it with sustainability trends, potentially enhancing its long-term appeal to investors focused on environmental responsibility.

OM:BRAV Dividend History as at Jul 2025

Simply Wall St Dividend Rating: ★★★★☆☆

Overview: Bank Handlowy w Warszawie S.A., along with its subsidiaries, offers a variety of banking services to individual and corporate clients both in Poland and internationally, with a market cap of PLN15.63 billion.

Operations: Bank Handlowy w Warszawie S.A. generates revenue through its Retail Banking segment, which accounts for PLN1.32 billion, and its Institutional Banking segment, contributing PLN3.16 billion.

Amidst a backdrop of fluctuating trade policies and economic uncertainty, Asian markets have been navigating a complex landscape. With inflationary pressures and trade tensions influencing investor sentiment, dividend stocks in Asia offer a potential avenue for income-seeking investors to explore. A good dividend stock typically combines stable earnings with consistent payout histories, making them appealing during periods of market volatility as they can provide regular income streams despite broader economic challenges.

Top 10 Dividend Stocks In Asia

Name Dividend Yield Dividend Rating Yamato Kogyo (TSE:5444) 4.49% ★★★★★★ Nissan Chemical (TSE:4021) 4.24% ★★★★★★ Japan Excellent (TSE:8987) 4.38% ★★★★★★ HUAYU Automotive Systems (SHSE:600741) 4.46% ★★★★★★ Guangxi LiuYao Group (SHSE:603368) 4.45% ★★★★★★ GakkyushaLtd (TSE:9769) 4.62% ★★★★★★ DoshishaLtd (TSE:7483) 4.16% ★★★★★★ Daicel (TSE:4202) 5.01% ★★★★★★ CAC Holdings (TSE:4725) 4.84% ★★★★★★ Asian Terminals (PSE:ATI) 6.38% ★★★★★★

Click here to see the full list of 1247 stocks from our Top Asian Dividend Stocks screener.

Let’s explore several standout options from the results in the screener.

Simply Wall St Dividend Rating: ★★★★☆☆

Overview: Puregold Price Club, Inc. operates in the Philippines as a retailer and wholesaler of dry goods, food, and other merchandise, with a market cap of ₱97.14 billion.

Operations: Puregold Price Club, Inc.’s revenue from its retailing business amounts to ₱224.27 billion.

Dividend Yield: 3.2%

Puregold Price Club has recently announced a regular cash dividend of PHP 1.09 per share and a special dividend of PHP 0.72 per share, reflecting its commitment to returning value to shareholders despite a historically volatile dividend track record. The company’s dividends are well-covered by earnings and cash flows, with payout ratios at 29.5% and 24.7%, respectively, indicating sustainability in the near term despite past fluctuations in payments.

PSE:PGOLD Dividend History as at Jun 2025

Simply Wall St Dividend Rating: ★★★★★★

Overview: PAX Global Technology Limited is an investment holding company that develops and sells electronic funds transfer point-of-sale products across Hong Kong, the People’s Republic of China, the United States, and Italy, with a market cap of HK$5.70 billion.

Operations: PAX Global Technology Limited generates revenue primarily from its e-Payment Terminal Solutions Business, which amounted to HK$6.04 billion.