UBS has revised its outlook for US and UK equities, while lowering its assessment of European markets.
The bank"s analysts emphasize the defensive nature of UK markets, which are expected to benefit from a stronger dollar and have less exposure to risks associated with the Trump administration compared to other major non-US markets.
UBS is optimistic about US equities due to strong economic fundamentals that are likely to offset the impact of global growth slowdowns. This optimism is supported by factors such as low operating leverage, labor market flexibility, and the Federal Reserve"s dual mandate.
On the other hand, European equities have been downgraded due to weak relative earnings and economic momentum. Despite this downgrade, UBS advises against underweighting European equities, noting that the sector"s adjusted price-to-earnings ratio remains significantly discounted compared to the US.