UBS adds 3 stocks to balance cyclical and defensive mix in Europe strategy

Investing.com -- UBS is adjusting its European investment strategy in response to the Trump tariffs, adding AstraZeneca (NASDAQ:AZN), Enel (BIT:ENEI), and Vinci (EPA:SGEF) to its stock list to balance cyclical and defensive exposure.

"In order to deal with the fallout from ’Liberation Day,’ we added three names to our stock list: AstraZeneca, Enel, and Vinci," UBS states. 

"All three of them add a more defensive tilt to our theme and balance cyclical and defensive exposure, while at the same time bringing stock-specific positive drivers to the theme."

The move comes after U.S. President Trump introduced a baseline 10% tariff on imports from all nations starting April 5, with additional reciprocal tariffs on specific countries. 

UBS notes that these measures are "more aggressive than our base case and can be viewed as an escalation of trade war risks." 

As a result, markets have declined significantly. UBS believes its "Six Ways to Invest in Europe" strategy is well-positioned to navigate this environment. 

"It contains a significant proportion of stocks which are less vulnerable to tariff-related headwinds, in our view, while at the same time benefiting from the other positive drivers in Europe."

Regarding the newly added stocks, UBS explains, "UK-headquartered AstraZeneca helps us to reduce our underweight of the healthcare sector, while at the same time taking into account the more favorable treatment of the UK versus other nations." 

Enel, an Italian utility, "serves as a solid, more stable, non-tariff-exposed name," while Vinci, a French infrastructure company, has "very limited trade risks."

UBS remains neutral on the broader European market but sees its selective approach as a way to optimize risk and return in an increasingly uncertain environment.