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UBS anticipates a continued increase in gold prices, driven by sustained demand from central banks, which are emerging as significant buyers in the market. This trend highlights the ongoing importance of gold as a strategic asset in financial portfolios.
UBS analysts warn of a 35% chance of a stock market bubble due to rising bond yields, particularly affecting high-valuation sectors like technology. If bond yields hit 5.5%, high-valuation sectors could comprise 40% of the market with a P/E ratio of at least 45 times. UBS recommends low-leverage defensive stocks and suggests increasing exposure to financial stocks as a hedge against populism and inflation.
First-time buyers are facing historically poor affordability, spending about 30% of their disposable income on mortgage payments, significantly above the long-term average of 25%. This is driven by record home prices, which have pushed mortgage payments higher, with little expectation for improvement in affordability in the near future. Despite a projected increase in disposable income, rising mortgage costs and stable rates are likely to keep homeownership out of reach for many.
The Swiss stock market is set for gains as Wall Street experiences a record chase fueled by Trump’s business-friendly rhetoric and strong corporate balance sheets. Oil prices fell following Trump's call for OPEC to lower prices, while GE Aerospace surged 6.5% on robust demand forecasts. In contrast, Electronic Arts shares plummeted 17% due to a lowered financial outlook.
US stocks surged, with the S&P 500 reaching a record high above 6100, buoyed by President Trump's call for interest rate cuts. In Australia, the ASX 200 continued its upward trend, nearing its December peak ahead of key CPI data. Key economic indicators are set for release this week, including US durable goods orders and the Federal Open Market Committee meeting.
Asian markets opened positively, with the Nikkei up 0.42%, ASX 0.40%, and KOSPI 1.0%, amid optimism surrounding Trump’s policies on AI investments and interest rates. The upcoming Bank of Japan meeting is pivotal, with expectations of a 25 basis point rate hike, which could influence the Nikkei's performance at the critical 40,220 resistance level. A hawkish tone may lead to a breakout, while a dovish stance could stabilize market volatility.
The Bank of Japan raised its target interest rate to 0.5% and significantly upgraded its inflation outlook, anticipating rates to remain above 2% through FY2026. While the BoJ is not rushing to hike again, strong wage negotiations could lead to another increase in May. The yen may gain traction, but its movement largely hinges on US Treasury yields and trade policies.
Investors are eagerly anticipating Donald Trump's upcoming speech in Davos, hoping for a commitment to strategic Bitcoin reserves. As the market remains uncertain about Bitcoin's future in the U.S., upcoming Fed and ECB meetings are expected to influence monetary policy and potentially enhance the appeal of riskier assets like Bitcoin.
Barclays has called for effective personal income tax cuts in India's FY26 budget to stimulate consumption and growth while maintaining fiscal consolidation. The firm anticipates changes to the new tax regime and potential excise duty reductions for fuel, emphasizing the need for increased disposable income to boost demand. Barclays also expects the government to achieve a fiscal deficit target of 4.5% of GDP for FY26, alongside a roadmap for debt consolidation.
The ECB is expected to implement a 25 basis point cut in the policy rate to 2.75% on January 30, with further cuts anticipated at each of the four meetings in the first half of the year, ultimately lowering the rate to 2.00% by mid-year. Analysts suggest that while the ECB remains confident in controlling inflation, the pace of cuts may slow in the second half, with a terminal rate projected at 1.50% by year-end, reflecting below-trend growth and inflation risks.
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The information provided herein is generated by experimental artificial intelligence and is for informational purposes only.
ubs predicts continued increase in gold prices driven by central bank demand
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