LONDON, April 10 (Reuters) - A positive correlation

between global oil benchmark Brent crude and U.S.

equities has reemerged in 2025, reflecting concern about the

slowing economy and the impact of U.S. President Donald Trump's

trade wars.

Asset classes moving in tandem presents a conundrum for

money managers, challenging ideas like commodities are a good

way to diversify portfolios as they are less likely to fall at

the same time as stocks. The current environment with widespread

growth fears has spurred investors to seek new strategies.

Since Trump took office on January 20, crude and U.S. stocks

have moved in lockstep, as concern about the outlook for the

global economy and growth have rattled sentiment across markets.

The one-month correlation between the two - a metric that

reflects how much two assets tend to follow one another, with

-1.0 reflecting no correlation at all and 1.0 reflecting a

near-perfect correlation - rose to as much as 0.9 in March.

"The oil price is moving today not because of inflation, but

because of growth and that's why oil and equities are becoming

more correlated," said Shaniel Ramjee, co-head of multi-asset

funds at Pictet Asset Management in London.

"The market is more worried about growth than anything.

Tariffs can increase short-term inflation but it's really the

impact on growth that's driving this correlation."

On Wednesday, Trump said he would temporarily lower the

duties he had just imposed on dozens of countries while further

ramping up pressure on China, sending stocks and oil higher. Oil

resumed falling on Thursday ahead of the U.S. stock market open.

"Oil and equities tend to highly correlate when concerns

about economic slowdown are rising," said Tamas Varga of oil

broker PVM.

"Demand prospects, together with the outlook for equities,

are at the whim of the chaotic policymaking of the U.S.

administration, which is presently negative."

A positive correlation between oil and equities is not that

rare, however. Brent and the S&P500 were strongly correlated for

most of the June-August period last year.

Tim Evans of advisory firm Evans on Energy said trading the

correlation presented at least two difficulties - uncertainty

over how long it will last and whether it's any easier to

forecast direction of the S&P 500 or the oil price.

"Those with a confident view of the S&P 500 may be better

off trading the index than trading oil," he said.

CUTTING OIL INVESTMENT

Some fund managers have cut back on investments in crude

futures, instead preferring other commodities such as gold. A

benchmark gold futures contract hit a record high last week.

"We don't have a positive view on oil. Tariffs are

definitely impacting the demand picture," said Luc Filip, head

of investments at SYZ Private Banking in Geneva.

Antonio Cavarero, head of investments at Generali Asset

Management, agrees.

"Oil is more exposed to the possible softening of the

economic cycle," Cavarero said. "In this moment you want to be

in corners of the market that are less exposed to unpredictable

decisions by policymakers."

Ramjee of Pictet Asset Management said the oil and stocks

correlation could weaken should the U.S. administration stop

short of its more extreme tariff threats.

"If the tariffs aren't that impactful or more scaled down,

we will likely see a decoupling," he said. "People will go for

oil to take advantage of that improved growth picture, but we're

not seeing this yet, there's still the possibility for a

negative surprise on growth."

For now, the funds he manages have built up a large position

in gold and gold mining stocks to diversify away from more

correlated markets. He's also trading less and putting on

smaller positions because of the volatility in markets.