Trump’s Second Term: Shocking FTSE Shifts Leave Investors Reeling—Are You Missing Out?

The first year of President Donald Trump's second term has been a whirlwind for investors, as his unpredictable policy moves continue to shake up the markets. Since his inauguration on January 20, 2025, Trump's rapidly evolving agenda has prompted significant market fluctuations, keeping many investors on high alert.

A stark example occurred on April 2, when Trump declared sweeping tariffs on various imports during a speech he called "Liberation Day," leading to a sharp sell-off in stocks. However, as the year progressed, the announcement of tariff agreements with various trading partners alleviated some of the anxiety among investors. Positive trade news, alongside strong corporate earnings, a surge in enthusiasm for artificial intelligence, and interest rate cuts, contributed to a market recovery.

In the U.S., the main indexes reflect this volatility. The S&P 500 is up nearly 17% over the past year, the tech-focused Nasdaq Composite has advanced almost 22%, while the Dow Jones Industrial Average has gained over 14%. Internationally, indices have shown even stronger performance: the UK's FTSE 100 is up nearly 20%, the pan-European STOXX 600 has gained 16%, Hong Kong's Hang Seng index has soared more than 35%, and Japan's Nikkei 225 has risen over 39%.

“Trump’s actions over the past year have, or stand to have, a profound impact on consumers, businesses, geopolitics, global trade, and more," said Dan Coatsworth, head of markets at AJ Bell. He noted that while businesses have faced challenges, they have had no choice but to adapt, and investors appear to maintain faith in many companies' ability to continue growing earnings.

The year has already begun with its share of volatility. U.S. military action in Venezuela and Trump's threats of new tariffs on eight European countries, contingent on a deal regarding the proposed takeover of Greenland, have only added to the uncertainty.

As we delve into the performance of specific sectors over the past 12 months, the heightened geopolitical tensions have significantly impacted the defense sector. Under pressure from Trump’s administration, NATO members have pledged to increase defense spending to 5% of their gross domestic product (GDP) by 2035. Lee Wild, head of equity strategy at Interactive Investor, remarked that Trump has "had a massive impact on the UK defense sector." This shift has prompted a rush of investor interest in European defense stocks, resulting in remarkable gains: BAE Systems is up 71.5%, Rolls-Royce has surged 117%, Babcock International has soared nearly 195%, and Chemring Group is up 64%.

“Trump’s recent suggestion that U.S. defense spending increase by 50% to $1.5 trillion emphasizes the direction of travel,” Wild said. In Germany, Rheinmetall has emerged as a standout performer, with shares up 182.5% over the year, while steel producer Salzgitter has climbed 192%, driven by the approval of its Secure 500 steel product for military use.

The demand for gold as a safe haven investment has also skyrocketed amid geopolitical and economic uncertainties, with prices reaching new heights. “Investors can thank Trump for one thing—his chaotic second term is directly responsible for the soaring gold price,” Coatsworth noted. Shares in gold mining companies often rise more than the appreciation in gold prices, thus providing miners with fatter profit margins. For instance, Fresnillo, a precious metals miner, was the top performer on the FTSE 100 in 2025, with shares up an impressive 491%. Endeavour Mining has also seen significant growth, with shares climbing nearly 169% year-over-year.

Conversely, consumer-focused companies have struggled amid this turbulent landscape. Lale Akoner, a global market analyst at eToro, pointed out that brands such as German sportswear giant Adidas and Italian luxury car manufacturer Ferrari have suffered declines of more than 37% and nearly 31%, respectively. Additionally, German software company SAP and Dutch payments company Adyen have seen drops of nearly 24% and 8%, respectively. “These companies have lagged as higher-for-longer rates and a softer global consumer weigh on discretionary spending,” Akoner explained.

Overall, 2025 has rewarded sectors aligned with security, infrastructure, and financial resilience, while penalizing valuation-sensitive growth and consumer cyclicals. As the year progresses, investors will need to stay vigilant and adaptive, as Trump's policies continue to reshape not only the economic landscape but also the global market dynamics.