UBS Upgrades Global Stocks to "Attractive" Amid AI Boom and Economic Resilience

UBS Global Wealth Management has upgraded the global stock market rating from "neutral" to "attractive," citing robust U.S. economic growth, central bank monetary policy easing, and the boom in artificial intelligence (AI) as key drivers.

In a report released on Thursday, UBS analysts highlighted the resilience of economic growth and the proactive stance of major central banks. This has strengthened their belief that there is "ample room" for supportive policies.

The decision by major central banks, including the Federal Reserve, to cut interest rates has significantly bolstered the MSCI global stock index, which has risen by 16.3% so far this year. UBS notes that while the effects of monetary easing may have a lag, historically, the start of a rate cut cycle has been a positive catalyst for equities in the following 6 to 12 months.

Additionally, UBS emphasized that further stimulus measures from China are expected to boost global equities, with economic growth in other regions showing signs of a "bottoming out." This positive outlook is further supported by U.S. corporate earnings benefiting from economic resilience, AI advancements, a strong labor market, and gradually easing inflation pressures.

The report suggests that, within the broader industry landscape, the technology sector is poised to remain a primary engine for corporate earnings growth, although contributions from other sectors are also emerging.

UBS also identified the U.S. presidential election as a short-term risk, especially if former President Donald Trump is re-elected, given the potential for markets to swiftly react to tariff-related uncertainties.