UBS has expressed caution about the future of European equities due to the expected increase in bond yields and widening spreads.

Analysts anticipate minimal growth in corporate profits for the current year and the following year, reflecting a challenging environment for investors.

European companies also face significant competition from China, which poses a threat. While there are economic stimuli in China, their impact on European markets remains uncertain and is not expected to provide substantial support.

Additionally, UBS analysts highlight that governments are likely to implement higher corporate taxes to reduce budget deficits, which adds complexity to the investment landscape in Europe.