UBS Global Wealth Management has raised its stance on global equities to “attractive” from “neutral,” citing resilient U.S. economic growth, monetary policy easing by major central banks and an artificial intelligence (AI) boom.
“Economic growth is remarkably resilient and central banks have been proactive, giving us confidence the supportive backdrop has more room to run,” UBS analysts said in a note dated Thursday.
Interest rate cuts across major central banks including the U.S. Federal Reserve have primarily boosted the MSCI’s broad world equity index, a benchmark for gauging the performance of global stocks, by 16.3% so far this year.
“While the impact of monetary policy easing usually comes with some lag, the start of a rate-cutting cycle has historically been a positive catalyst for equity markets over the subsequent 6-12 months,” UBS said.
More stimulus measures from China will further aid global stocks, the brokerage said, adding that growth across other regions appears to have “bottomed out.”
Corporate earnings will benefit from the resilient U.S. economic backdrop that would be further supported by AI, robust labor markets and gradual easing of inflation, UBS said.
Among broader sectors, technology should remain the main engine of earnings growth, even as contributions from others pour in, it said.
U.S. elections are a short-term risk, UBS said, especially if former President Donald Trump is elected, as markets could quickly price in potential tariff risks.
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