UBS bullish on stocks after best quarter in six years, sees rally broadening
UBS maintains a bullish stance on global equities after the best quarterly performance in six years, expecting the rally to broaden beyond AI leaders as cyclical sectors catch up.
UBS has reaffirmed its bullish outlook on global equities following the best quarterly performance in six years, forecasting that the rally will broaden as cyclical sectors gain momentum.
The bank expects AI-related capital expenditure to approach USD 1 trillion next year, arguing that capacity constraints across the AI supply chain will support further gains in AI-linked equities despite ongoing concerns about capex sustainability. UBS sees a broadening rally as cyclical sectors catch up, aided by easing energy costs and improved supply visibility as Strait of Hormuz traffic gradually resumes. The bank does not expect the Federal Reserve to hike rates this year, viewing Fed Chair Kevin Warsh's task force approach as a signal of a slower near-term policy reaction, while any further ECB tightening is seen as delayed and data dependent.
For currency traders, the broadening equity rally could support risk-sensitive currencies such as the Australian and New Zealand dollars, while the Fed's perceived dovish stance may weigh on the US dollar. Traders can monitor these moves on NowPrice's live forex dashboard. Looking ahead, UBS retains a positive six-month outlook for global equities, but warns that any unexpected hawkish shift from central banks or renewed geopolitical tensions could disrupt the rally. Key data releases to watch include US employment figures and central bank communications in the coming weeks.