Global equity markets have climbed to record levels, and UBS argues that conditions remain favorable for further appreciation. The bank sees a combination of resilient fundamentals, diminishing tariff pressures and ongoing structural growth themes sustaining earnings growth through 2026.
UBS strategist Fabian Deriaz summarized the view succinctly: "the overall macro backdrop remains constructive, supported by easing tariff headwinds, expected Fed rate cuts, supportive fiscal policies, and a recovery in manufacturing." That macro stance underpins the firm's outlook for corporate earnings and equity valuations.
UBS retains an Attractive rating on global equities and expects earnings per share for the MSCI AC World Index to expand by 12% this year, a pace the firm describes as "significant and provides a buffer." The bank acknowledges that market prices currently incorporate an upbeat scenario, particularly given that oil flows remain heavily disrupted. Despite that, UBS believes the overall setup favors additional upside.
The firm also notes a gap between price moves and investor positioning. According to UBS, many investors trimmed risk exposures during the escalation phase of recent events and therefore missed part of the rebound. Deriaz draws a parallel to last April's tariff-driven selloff, contending that rebuilding exposure after such drawdowns helped push markets to new highs.
On preferences within equities, UBS favors industrials on a global basis for their combination of cyclical sensitivity and structural upside. In the U.S., the bank recommends a barbell approach that leans into consumer discretionary, financials, health care and utilities. Geographically, UBS lists the United States, Japan, emerging markets and Switzerland as preferred markets.
UBS is taking a selective posture on artificial intelligence-related opportunities. The bank is focusing on areas outside U.S. large-cap technology, with particular interest in certain Chinese technology companies.
UBS flags several risks that could alter the outlook: the timing of any reopening of the Strait of Hormuz, increasing competitive pressures within technology sectors, and crowding in momentum strategies that could act as a source of market volatility. These factors are highlighted as items to monitor alongside the constructive macro drivers.
Overall, UBS presents a cautiously optimistic case for further gains in global equities, conditioned on the macro developments and the evolution of event-driven risks that could reshape investor positioning and market dynamics.