Global markets have opened on shaky ground following renewed tensions in the Middle East, with both US and UK indices feeling the pressure of fresh geopolitical instability.
Crude oil jumped 2.78% to $93 a barrel as the Iran conflict prompted fears of further supply disruptions in the Strait of Hormuz, rattling energy-dependent markets worldwide.
The tech-heavy Korean KOSPI index slumped 9% within minutes of opening on 8 June, signalling the extent to which AI-driven supply chain fears are now spilling into global equities.
Nasdaq 100 giants Apple, Nvidia and Microsoft all rely on Korean suppliers Samsung and SK Hynix for memory chips, making them particularly exposed to any escalation in regional tensions.
UK-listed stocks including Diploma, Smiths Group and Rolls-Royce also depend on Korean suppliers, while miners such as Rio Tinto and Glencore face indirect risks from a broader decline in Asian markets.
The knock-on effect of such widespread instability is that even stable, defensive stocks become cheaper, potentially offering long-term investors a rare and compelling entry point into quality names.
Legal & General (LSE: LGEN) stands out as a prime example, currently offering the highest dividend yield on the FTSE 100 while trading at a price only marginally above its 2016 level despite the overall index rising 70%.
The major insurer delivered impressive recent results, with core operating profit growing 6% year-on-year to £1.62bn and pre-tax profit surging 143% to £807m, underpinned by particularly strong performance in Institutional Retirement.
A Solvency II ratio of 217% provides a significant cushion to sustain dividends even through a downturn, and the group’s recent £1.2bn share buyback, the largest in its history, underscores its commitment to returning value to shareholders.
Earnings have been choppy as the UK economy navigates geopolitical uncertainty, and Legal & General still faces risks from tariff-related volatility and a Middle East conflict that may drag on longer than expected.
Other high-yield names worth watching in this environment include M&G, Imperial Brands and Diageo, all of which carry solid dividend track records yet have experienced short-term price depreciation despite reporting strong underlying results.
With a potential AI bubble and persistent supply chain shocks creating a double-whammy threat for markets, trimming riskier tech positions in favour of defensive, income-generating stocks appears to be a prudent strategy for the current climate.
If and when the market recovers, shares in deeply discounted quality companies like Legal & General may never again trade at such attractive levels, making the present moment one that income-focused investors will want to take seriously.