UBS: Expect S&P 500 to reach 6,400 by the end of next year, with quality stocks continuing to outperform value stocks

UBS published a report saying that the shocks of inflation and interest rates over the past two years are fading, and the global chief economist and head of strategy research of UBS, Arend Kapteyn said that although the US economic growth will slow down under Trump's cabinet appointments, the US stock market will be weak in the first half of next year, but the stock market will improve in the second half of the year once the profit forecast drops to a more realistic level, and expects the S&P 500 index to reach 6,400 points by the end of next year, with a potential rise of about 6%, and the US stock market will outperform Europe in the next 12 months, while Europe will outperform emerging markets. High-quality stocks will continue to outperform value stocks, but US financial stocks should perform well. Among emerging markets, Chinese internet stocks are still the preferred choice.

Arend Kapteyn expects global economic growth to slow from 3.2% to 2.6% over the next two years in the UBS Global Economic and Market Outlook 2025-26, partly due to the US not being able to maintain its current economic growth. Arend also said that no currency in any region reflects tariff risk, and expects the euro and yen to continue to be under pressure in the short term, and if Japan's economic growth continues to improve, it will prompt the Bank of Japan to raise interest rates to nearly 1% next year, and the yen may rebound sharply. On the commodity side, the demand for gold from central banks and retail markets remains strong to diversify portfolios, and even if gold's performance slows down, it will still be a winner among commodities, and investor enthusiasm for copper will be dragged down by weak economic growth.