Global Stocks Should Rise Due to Favourable Backdrop: UBS

Global equities look set to extend recent gains as a supportive macroeconomic backdrop continues into 2026, according to UBS. 

The bank said in a note that last week’s rebound in global markets highlighted renewed confidence in further Federal Reserve easing, with both the MSCI All Country World and the S&P 500 posting their strongest weekly advances since May. 

UBS noted that “the market-implied probability of a December rate cut has climbed to over 87%, from below 40% just over a week ago.”

The bank’s chief investment office argues that equities tend to perform best “when the economy is not in recession and the Fed is cutting interest rates,” adding that the latest economic releases reinforce that environment. 

The unemployment rate has risen to its highest level in nearly four years, and the Fed’s Beige Book pointed to “a slight decrease in employment,” factors that the bank believes will keep policymakers’ easing bias intact.

While the U.S. economy is experiencing a temporary soft patch, UBS expects a rebound next year. It said household balance sheets remain healthy and high-frequency credit card data indicate that spending is still solid. 

The bank forecasts that “US growth [will] reaccelerate into the second half of 2026,” supported by targeted tax cuts and global fiscal stimulus.

UBS also highlighted strong earnings prospects, estimating growth of between 7% and 14% across major equity markets in 2026. It said these expectations “should drive further equity gains” despite elevated valuations.

Against this backdrop, UBS concluded that investors who are under-allocated to stocks “should add to equities,” expressing preference for U.S. tech, health care, utilities, banking, and key Asia-Pacific markets such as Australia, Japan, China, and “particularly China’s tech sector.”