The current cycle of market volatility is unusual in that everyone expected it – and nobody saw it coming.

The markets seemed to exhale a collective sigh of relief when President Trump, unveiling his tariff plan on ‘Liberation Day’ announced a ‘minimum baseline tariff of 10 percent’.

Relief turned to alarm when it turned out the baseline was only the start. Trump’s announced ‘reciprocal’ tariffs include 20% on the EU, 24% on Japan, not to mention potentially devastating tariffs on Cambodia, Bangladesh and Vietnam.

Red Monday

A lot has happened in subsequent days. Looking at the markets on the morning of 7 April, equities are down everywhere. The Hang Seng saw it biggest decline since 1997;  the Nikkei plunged, European equities from Frankfurt to Paris to London were down etc.

Crypto is down. Gold saw some gains trimmed as investors sold bullion to cover trades. And oil prices fell as investors worry about a slowdown in the global economy. Copper fared similarly.

Amid this uncertainty, what should investors do? For retail investors, the answer is… Pray? Consult a fortune teller? Quit social media and hide? More seriously: stay calm and seek professional investing advice. (What many of them are actually doing is ‘buying the dip’. An understandable move, considering how well it has served them in recent years.)

Professional traders, by contrast, will have their own hedging and profit-seeking strategies. Volatility needs to be managed, but it also presents opportunities for speculation.

Institutional strategies

Of course, there’s a world of difference between taking the market’s pulse and successfully trading on volatility. Or, as Alan Livsey put it in the FT, “volatility, like butterflies, can be easy to spot and hard to capture.”

In a note published on 4 April, UBS presented a brief overview of ‘some ways to not only manage volatility, but also to take advantage of it.’ They take a broad view (gold to hedge against political risk, quality bonds to potentially offer upside in a recession), and also point to the value of advanced strategies: “hedge fund strategies like discretionary macro, equity market neutral, select relative value or multi-strategy can cushion portfolios in down markets and capitalise on dislocations.”

More directly, the note suggests “investors should consider monetising currently high levels of equity volatility with yield-generating strategies.” While index volatility has been notable, they noted that “single-stock volatility has risen by an even greater margin than index level volatility, suggesting greater scope for yield generation”. However, they “believe S&P 500 levels between 5,000 and 5,250 would represent attractive entry points in our base case”.

Customised trading solutions for volatile times

The UBS note is just one effort among several to make sense of tariff-related market volatility. There are as many strategies as there are traders. However, there is one thing these advanced methods all have in common: they rely on access to broad wide range of assets, such as FX, indices, single stocks, crypto and commodities. They also depend on speedy, reliable execution, supported by advanced trading technology.

As your bespoke liquidity provider, Finalto put the world’s markets in your hands. With thousands of instruments over multiple asset classes, supported by deep expertise and proprietary trading technology, we help business achieve their trading strategies.

Get in touch with Finalto to discuss how our personalised liquidity solutions can help your business navigate the current market volatility – and achieve future growth.

All opinions, news, research, analysis, prices or other information is provided as general market commentary and not as investment advice and all potential results discussed are not guaranteed to be achieved. The information may have been derived from publicly available sources, company reports, personal research, or surveys. Past performance is not indicative of future performance. Trading carries risk of capital loss. Service available to professional clients only.