UBS Global Wealth Management has upgraded its view on global equities from “neutral” to “attractive”, citing several factors such as resilient U.S. economic growth, monetary policy easing by major central banks, and an artificial intelligence (AI) boom. The analysts at UBS expressed confidence in the economic growth, stating that central banks have been proactive in their measures, which provides a supportive backdrop for the markets.
The interest rate cuts implemented by major central banks, including the U.S. Federal Reserve, have significantly contributed to the positive performance of the MSCI’s broad world equity index, which has seen a 16.3% increase so far this year. UBS pointed out that while the impact of monetary policy easing may take some time to materialize, the beginning of a rate-cutting cycle has historically been beneficial for equity markets in the following 6-12 months.
UBS also mentioned that additional stimulus measures from China will further support global stocks, and growth in other regions seems to have stabilized. The brokerage firm anticipates that corporate earnings will improve due to the strong U.S. economic environment, which will be further boosted by AI advancements, a healthy labor market, and gradual inflation easing.
Regarding specific sectors, UBS highlighted that technology is expected to continue driving earnings growth, although contributions from other sectors are also anticipated. The upcoming U.S. elections were identified as a short-term risk, especially if former President Donald Trump is re-elected, as markets could quickly factor in potential tariff uncertainties.