UBS Upgrades Global Equities to "Attractive"

By Siddarth S

(Reuters) – 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.

Key Insights:

• Economic growth is remarkably resilient and central banks have been proactive, giving confidence that the supportive backdrop has more room to run, UBS analysts noted in a Thursday report.

• Interest rate cuts from major central banks, including the U.S. Federal Reserve, have boosted MSCI's broad world equity index by 16.3% this year.

• Historically, the start of a rate-cutting cycle typically serves as a positive catalyst for equity markets over the next 6-12 months.

• Additional stimulus measures from China will further support global stocks, with growth in other regions appearing to have "bottomed out".

• Corporate earnings are expected to benefit from the resilient U.S. economy, AI, strong labor markets, and gradual inflation easing.

• Technology is anticipated to remain the primary driver of earnings growth, although contributions from other sectors will also increase.

• U.S. elections pose a short-term risk, particularly with the potential re-election of former President Donald Trump, as markets may adjust to potential tariff risks.