UBS Global Wealth Management has upgraded its rating for global stock markets from "neutral" to "attractive." The decision is based on robust U.S. economic growth, easing monetary policies by major central banks, and the burgeoning artificial intelligence (AI) sector.
UBS analysts highlighted the resilient economic growth and proactive actions by central banks, including the Federal Reserve, as key reasons for their optimistic outlook. These measures have significantly boosted the MSCI World Index, which has risen by 16.3% this year.
Historically, the start of an interest rate cut cycle has acted as a positive catalyst for stock markets over the following 6 to 12 months, despite the usual lag in the effects of monetary easing.
Additionally, UBS noted that further stimulus measures from China are likely to bolster global markets. They also observed signs of economic recovery in other regions.
Corporate earnings stand to benefit from the resilient U.S. economy, supported by AI advancements, a strong labor market, and gradually easing inflation. While the technology sector is expected to drive earnings growth, contributions from other sectors are also emerging.
However, UBS pointed out that the upcoming U.S. presidential election poses a short-term risk. Particularly if former President Donald Trump wins, as markets may quickly react to potential trade risks.
