Stalled US-Iran Talks Should Not Derail Solid Fundamentals

UBS maintains an Attractive stance on global equities, projecting the S&P 500 to reach 7,900 by year-end despite geopolitical tensions and delayed Fed rate cuts. Strong Q1 corporate earnings and AI adoption remain the primary drivers of market performance.

Key Takeaways

• 1.Maintain an 'Attractive' view on equities despite geopolitical volatility in the Middle East, as corporate earnings and economic fundamentals remain solid.
• 2.Expectations for Fed rate cuts have been pushed back to December 2026 due to sticky core inflation, though the bar for further hikes remains high.
• 3.Rising US government debt burdens are a medium-term risk to monitored but are unlikely to derail the positive base case for 2026.

Table of Contents

• From the studio
• Thought of the day
• What to watch: 29 May
• Underlying inflation... remains anchored
• Government debt burdens are a risk to be monitored
• Caught our attention
• Market update
• Appendix

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