Multiple positives support UBS to upgrade global stock market rating to "attractive"

UBS Global Wealth Management raised its global stock market rating to "attractive" from "neutral" on the back of strong US economic growth, easing monetary policy by major central banks and the AI boom. Analysts at UBS said in a Thursday report: "The resilience of the growth and the proactive central banks have led us to believe that supportive policies still have more room." Major central banks, including the US Federal Reserve, have cut interest rates, which has largely boosted the MSCI World Index, which is up 16.3 per cent this year. "While the impact of monetary easing is usually lagged, historically the start of a rate cut cycle has been a positive catalyst for the stock market in the following six to 12 months," UBS said. UBS said further stimulus from China would further boost global stocks, adding that growth in other regions appeared to be "bottoming out". Corporate earnings would benefit from the backdrop of resilient US economic growth, while AI, a strong labour market and easing inflation would further support the US economy, UBS said. In broader sectors, the technology sector should remain the main driver of corporate earnings growth, although contributions from other sectors are also emerging, the report said. The US election is a short-term risk, particularly if former president Donald Trump is elected, as the market may quickly digest potential tariff risks, UBS said.