Speculation about a stock market crash is intensifying as the bond market sell-off deepens and investors seek safe havens like gold. With September historically being a weak period for UK stocks anyway, many Stocks and Shares ISA investors are fearing a sharp retracement on equity markets.
But this doesn’t mean share pickers should retreat, in my opinion. Indeed, here are two top UK shares to consider even in the current uncertain climate.
Brand hero
Consumer staples producers like Unilever (LSE:ULVR) often outperform the broader stock market during bearish periods. Foods, and personal care and household goods products tend to remain broadly stable over time, providing these companies with good earnings visibility that supports their share prices.
That’s not all. In the case of this FTSE 100 share, it enjoys exceptional brand power through labels like Dove soap and shower gel, Magnum ice cream, and Persil detergent. This supports consumer demand even during economic downturns, and even allows the firm scope to raise prices to grow earnings even when consumers feel the pinch.
Indeed, latest financials showed underlying sales up 3.4% between January and June despite tough broader conditions. Volumes and sales were up 1.5% and 1.9% in the same 2024 period.
With its successful advertising campaigns and strong record of innovation, Unilever has proved a robust stock to own over time. Be mindful, though, that its marketing costs aren’t small and sometimes prove a significant challenge to earnings growth.
On balance, I think the Footsie company’s a top stock to consider in uncertain times like these.
Gold star
As mentioned at the top, gold demand is rising as investors seek out classic defensive assets. One that I think is worth serious attention right now is the VanEck Gold Miners (LSE:GDGB) exchange-traded fund (ETF).
Gold prices are surging right now, and earlier today struck new peaks near $3,450 per ounce. The yellow metal is now up 42% in the year to date, and is tipped for further gains as inflationary and growth pressures rise.
Funds like this VanEck one track the gold price, as their profits are naturally linked closely to metal prices. However, they can also rise in value more sharply than the precious metal. This is thanks to the ‘leverage’ effect, where — thanks to their relatively fixed costs — each extra dollar of revenue drops straight into the bottom line, meaning profits can grow more sharply.
Remember, though, that this phenomenon works in both directions, so earnings falls can be more pronounced if gold prices drop.
I like the VanEck Gold Miners fund because of the way it allocates capital. A focus on large-cap miners like Newmont, Agnico Eagle Mines, and Wheaton Precious Metals can provide stability not afforded by ETFs that concentrate on junior miners.
Furthermore, it holds shares in 62 different companies. This broad footprint provides decent protection for investors in the event of one or two miners experiencing operational issues.
