UBS strategists have upgraded their recommendations for UK and US equities while advising investors to maintain interest in European stocks, despite the region"s sluggish economic growth.

The Swiss bank has assigned an "overweight" rating to UK equities, citing a significant 25% P/E discount compared to the MSCI AC World index and a resilient growth forecast of 1.4% for 2025. Analysts believe the UK is less vulnerable to potential protectionist measures from the incoming Trump administration.

In contrast, UBS has downgraded its recommendation for European equities to "weight in line" due to disappointing corporate results and a weak growth trajectory. However, the bank refrains from underweighting European stocks, suggesting that the potential for positive surprises is currently higher. UBS is focusing on quality stocks with attractive valuations, highlighting companies such as CapGemini, Brenntag, and Campari as favorable investment options.