Fundamentals Should Support Markets Despite Risks

UBS maintains a positive view on global equities and quality bonds, citing strong earnings growth forecasts of 20% for the S&P 500 and 62% for Asia ex-Japan. Despite the ongoing Iran war and yield volatility, the bank advises staying invested and using commodities as a geopolitical hedge.

Key Takeaways

• 1.Global equities are expected to rise further supported by 20% S&P 500 EPS growth and a 62% profit jump in MSCI Asia ex-Japan.
• 2.Quality bonds remain attractive as markets are likely overestimating the potential for further central bank rate hikes.
• 3.Geopolitical risk from the 13-week Iran war persists, but a base case assumes oil prices stay contained to avoid a global growth shock.

Table of Contents

• From Circle One
• Thought of the day
• Strong earnings are likely to support further gains for stocks over the medium term
• What to watch: 25 May
• Caught our attention
• Market update
• Global asset class preferences definitions
• Appendix

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