Utilities Sector: Ride the Defensive Wave Amid Trade Wars and Solar Storms

The utilities sector has long been a refuge for investors fleeing market chaos, and today—amid global trade wars, solar panel loan defaults, and geopolitical fireworks—it's time to double down on this defensive powerhouse. But not all utilities are created equal. Let's cut through the noise and pinpoint the winners in this volatile landscape.

Trade Tensions Are Fueling the Utilities Rally

Global trade conflicts are pushing investors into “safe” sectors like utilities, where consistent cash flows and low sensitivity to economic cycles shine. The Federal Reserve's reluctance to cut rates until September or later (despite 1.4% GDP growth) is keeping Treasury yields muted—a tailwind for utilities, which trade inversely to bond yields.

But here's the twist: geography matters. The U.S. has imposed 50% tariffs on non-U.K. steel and aluminum imports, while granting the U.K. a 25% rate as part of their post-Brexit economic deal. This creates a cost advantage for U.K. utilities like SSE PLC (SSE) and Greencoat UK Wind, which rely less on U.S. supply chains and benefit from policy clarity.

The U.K. Utilities Play: SSE and Greencoat UK Wind

SSE, a U.K. energy giant with a robust renewable portfolio, is positioned to thrive as European energy demand rebounds. Its offshore wind and grid investments are insulated from U.S. tariff chaos, and its regulated assets provide steady income. Meanwhile, Greencoat UK Wind, a renewable infrastructure fund, owns 23 wind farms across the U.K. With 90% of its output contracted at fixed prices, it's a “sleep well at night” bet.

Action Alert: These stocks are undervalued relative to their growth prospects. If the U.S. and EU reach a tariff truce by August, watch for a surge in utilities as Treasury yields drop further.

Nuclear Tech Exporters: GE Vernova's Quiet Revolution

While solar faces headwinds, nuclear power is quietly resurging—and that's where GE Vernova (GE) comes in. This spinoff from General Electric is a global leader in nuclear retrofitting and small modular reactors (SMRs), which are critical to energy security.

Why now? The U.S. Inflation Reduction Act offers $60 billion for clean energy, and nuclear is a key beneficiary. GE's tech is export-friendly, with projects in the U.K., Canada, and the Middle East. Unlike solar, nuclear isn't derailed by lithium tariffs or loan defaults—it's about long-term contracts and government backing.

Solar: A Minefield of Volatility

Solar stocks like Sunrun (RUN) are flashing warning signs. Rising interest rates, supply chain bottlenecks, and loan defaults in residential solar projects are squeezing margins. The U.S. imposed 10% baseline tariffs on Chinese-made solar panels in June, but these tariffs could rise if trade disputes escalate.

Worse, oversupply from Chinese manufacturers is driving price wars. Sunrun's 6% rebound in June is no comfort—this sector is a rollercoaster ride.

Bottom Line: Avoid solar equities until there's clarity on tariffs, demand, and the Fed's rate path.

The Bottom Line: Go Defensive, Go Global

The utilities sector is a buy, but only if you pick the right names. Prioritize U.K. utilities for their tariff advantages and nuclear plays like GE Vernova for their long-term growth. Avoid solar until the storm passes.

The Fed's delayed rate cuts and trade policy uncertainty will keep utilities in favor. This isn't just about bonds—it's about owning the energy infrastructure that the world can't do without.

Stay hungry, stay greedy—but stay smart.

Disclosure: The above analysis is for informational purposes only and not a recommendation to buy or sell. Consult a financial advisor before making investments.