The parts of the UK stock market left behind from market rebound

Oil producers, pharmaceutical companies and Vietnam-focused investment trusts have been left behind on the UK stock market as shares rebound across the world following the Liberation Day-triggered sell-off.

Most of the major indices globally have clawed back all the lost territory since Trump’s 2 April speech sent shockwaves across the investment and business community. Germany’s Dax is now up 6%, Japan’s Nikkei 225 has advanced 5% and the Nasdaq in the US is 2% ahead. Even the FTSE 100 is back at the same level as just before Donald Trump unveiled his sweeping tariffs, suggesting that investors have calmed down after the initial market panic.

The Trump administration seems willing to do deals and scale back tariffs if there is something in it for the US. Last week’s trade deal between the UK and US, and now a tentative agreement between China and US, could be signs of things to come. Investors have taken these developments to be positive, and the rebound in share prices is the market’s way of saying too much bad news was priced into company valuations.

It’s a welcome shift in market dynamics and could encourage people who were sitting on the sidelines over the past month to resume drip-feeding money into the markets.

But despite this broad bounce-back, investors still seem uncertain about the outlook for three specific parts of the market.

Oil companies

Oil producers BP and Shell are still down by 10% to 12% since the Liberation Day speech on fears that a trade war would hurt the global economy and reduce energy demand. One would expect a lower risk of a recession to push the oil price back up. Indeed, the Brent Crude price was up 2.5% to $65.79 per barrel on the China-US trade agreement, and BP and Shell also moved up by a similar amount on Monday (12 May).

However, there are other dynamics at play which means there is still a long way to go for BP and Shell’s shares to get back to pre-Liberation Day levels.

Oil producers’ cartel OPEC+ is increasing supply into an already-oversupplied market. That has a negative impact on oil prices, although the flipside is that this could help to offset some of the inflationary pressures caused by tariffs.

Pharmaceutical companies

Drug giants AstraZeneca and GSK are down 12% and 6% respectively since 2 April. Their industry was initially excluded from the Liberation Day tariffs yet Trump has indicated that was only a temporary situation and levies would follow. Naturally, that creates uncertainty for demand, particularly if US customers find cheaper alternatives to AstraZeneca or GSK products.

Trump now says drug prices will be cut by 59% in the US. That’s bad for the two UK pharma groups as GSK generates 52% of its sales in the US and AstraZeneca generates 42%. Reduced sales could have a negative knock-on effect and hurt spending on research and development down the line. Pharmaceutical companies need to keep working on the next big drug discovery and scaling back R&D could backfire.

Vietnam investment trusts

There are three Vietnam-focused investment trusts on the UK stock market and all of them are still trading lower than on the eve of the Liberation Day speech. Trump has proposed 46% tariffs on Vietnamese goods coming into the US, which is problematic for a country that has made its name as an alternative manufacturing hub to China for Western companies.

Vietnam is a major exporter of machinery, textiles, footwear and headwear into the US and could suffer big time if tariffs make these goods far less competitive from a cost perspective. It could put pressure on Vietnam to speed up efforts to make its economy more dependent on domestic consumption.

The clock is ticking on the 90-day window to strike a deal with the Trump administration. Judging by the fact shares in all three Vietnamese investment trusts still haven’t fully recovered, investors remain worried that the country could be battered and bruised, even if the tariff rate is reduced.