UBS Analysts Report Positive Market Closure for First Half of 2024

UBS analysts reported a strong close to the first half of 2024 for global equities, with a 2.6% gain in June and a 13.5% increase in the MSCI All Country World Index. The U.S. S&P 500 led the advance, supported by evidence of moderating inflation, which UBS suggests will prompt the Federal Reserve to cut interest rates later in the year. Artificial intelligence, exemplified by Nvidia's market surge, was highlighted as a significant market theme. The upcoming debates between U.S. President Biden and his challenger may cause market volatility.

The first half of 2024 has seen a robust performance in global equities, with UBS analysts reporting a 2.6% gain in June and a 13.5% increase in the MSCI All Country World Index [1]. Leading the advance was the US S&P 500, which rose by a significant 5.6% to reach an all-time high of 5,600 [1]. This forecast, the highest among major brokerages, is based on evidence of moderating inflation, which UBS suggests will prompt the Federal Reserve to cut interest rates later in the year [1].

Artificial intelligence (AI) has been a significant market theme in recent months, with Nvidia's market surge serving as a prime example [2]. According to UBS, the potential benefits of AI for businesses are vast, including increased efficiency, improved decision-making, and enhanced innovation [2]. As a result, the technology sector is expected to continue outperforming, contributing to the overall growth of the S&P 500.

The upcoming debates between US President Biden and his challenger may cause market volatility [1]. However, UBS strategists remain optimistic, citing stronger earnings forecasts and a supportive economic backdrop as factors that will propel US equities through the rest of the year [1]. For 2024, UBS raised its earnings-per-share (EPS) forecast to $245 from $240, implying an 11.4% growth through the year [1].

The strong performance of the S&P 500 has been driven in part by the technology sector, which has risen nearly 21% so far this year [2]. US Treasuries have also rallied, with the 10-year yield shedding six basis points to 4.22% [2]. This positive momentum has carried through to Asian equities, with the MSCI Asia ex-Japan index also experiencing gains [2].

References:

[1] Reuters. UBS lifts S&P 500's year-end target to 5,600 points. May 28, 2024. https://www.reuters.com/business/finance/ubs-lifts-sp-500s-year-end-target-street-high-5600-2024-05-28/

[2] UBS. Latest House View. June 19, 2024. https://www.ubs.com/global/en/wealth-management/insights/chief-investment-office/house-view/daily/2024/latest-19062024.html