What does 'defensive stocks' mean?

Defensive stocks are shares in companies that tend to hold their value even when the broader economy is struggling. These businesses typically sell things people need every day, like food, electricity, or fuel, so their sales stay relatively stable regardless of whether the economy is growing or shrinking. Investors often turn to defensive stocks during uncertain times because they tend to be less volatile than the wider market.

Why does a rise in unemployment affect the stock market?

When more people lose their jobs, it usually means less money is being spent across the economy. This can hurt company profits and make investors nervous about the future. As confidence drops, people often sell riskier investments and move their money into safer options. That shift in behaviour can cause significant price swings across stock markets, particularly in sectors that depend on consumer spending.

What is the Federal Reserve, and why does it matter for investors?

The Federal Reserve, often called 'the Fed', is the central bank of the United States. One of its main jobs is to set interest rates, which influences how much it costs to borrow money. When the economy weakens, the Fed may cut rates to encourage spending and investment. However, cutting rates can also risk pushing inflation higher. These decisions have a big impact on stock markets, which is why investors pay close attention to what the Fed says and does.

Why do investors buy gold stocks when the economy looks shaky?

Gold has long been considered a 'safe haven' asset, meaning people tend to buy it when they are worried about the economy or financial markets. When stock prices fall or uncertainty rises, gold often holds its value or even increases in price. Gold mining companies benefit from this dynamic because the value of the gold they produce goes up, which can boost their profits and share prices.

What is a dividend yield, and why does it matter for defensive investing?

A dividend yield tells you how much income a company pays out to shareholders each year, expressed as a percentage of its share price. For example, a 5% dividend yield means that for every £100 worth of shares you hold, the company pays you £5 a year. Defensive stocks often have higher dividend yields, which means investors can earn a steady income even if the share price does not rise much. This makes them particularly appealing during periods of market uncertainty.

What does 'inelastic demand' mean?

Inelastic demand describes a situation where people continue buying a product or service even when prices change or economic conditions worsen. Energy, food, and utilities are classic examples. Even if household budgets tighten, people still need electricity, petrol, and groceries. Companies that sell these essentials tend to maintain steadier revenues during downturns, which is why they are often favoured as defensive investments.

15 Handpicked stocks

Defensive Stock Rotation Overview | Job Loss Impact

The unexpected loss of 92,000 U.S. jobs in February has sparked equity market volatility and complicated the Federal Reserve's interest rate outlook. This macroeconomic uncertainty creates a compelling opportunity in defensive sectors and energy stocks as investors seek reliable havens.

Why You'll Want to Watch These Stocks

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Gold Is Having Its Moment

When jobs disappear and markets get jittery, investors have historically rushed to gold. This group includes some of the world's leading gold miners, giving you a front-row seat to that flight to safety.

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The Lights Stay On Regardless

Utility and energy companies keep delivering essential services whether the economy is booming or struggling. That kind of reliability is exactly what cautious investors look for when uncertainty spikes.

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People Still Need to Eat

Consumer staples giants like General Mills and Post Holdings sell everyday essentials that fly off shelves no matter what the job market is doing. Boring? Maybe. But steady and dependable when it matters most.

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About This Group of Stocks

Our Expert Thinking

When the U.S. economy unexpectedly shed 92,000 jobs in February, markets wobbled and uncertainty crept in. Our analysts responded by identifying companies in sectors that tend to hold steady no matter what is happening in the broader economy. Energy producers, utility providers, consumer staples brands, and gold miners all share one thing in common: people need what they sell, even in tough times. This group was built around that simple but powerful idea.

What You Need to Know

These stocks come from sectors known for their resilience during economic slowdowns. Utilities provide electricity and water. Consumer staples companies sell everyday essentials like food. Energy majors supply oil and gas the world depends on. Gold miners benefit when investors seek a safe store of value. These are not high-risk, high-reward bets. They are businesses built to deliver steady, reliable performance when markets get bumpy.

Frequently Asked Questions

15 Handpicked stocks

Defensive Stock Rotation Overview | Job Loss Impact

Top Picks from This Group

Here are a few of the assets in this group. Create an account to unlock the full list.

Exxon Mobil

XOM

Current Price

$161.43

As a massive integrated energy provider, Exxon Mobil acts as a reliable, cash-generating haven during macroeconomic uncertainty.

SHELL PLC SPON ADS EA REP 2 ORD SHS

SHEL

Current Price

$92.55

Shell's global scale and steady energy production offer investors a defensive posture against equity market volatility.

TOTALENERGIES SE

TTE

Current Price

$88.87

TotalEnergies' diversified global oil and gas operations make it a stable energy haven in volatile economic conditions.

BP SPON ADR EACH REP 6 ORD SHS

Current Price

$43.17

EOG Resources

EOG

Current Price

$147.73

GENERAL MILLS INC

GIS

Current Price

$39.86

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