UBS: S&P 500 Set to Climb Despite US-Iran Flare-Up, Investors Told to Stay Diversified

UBS’s Chief Investment Office is urging investors to look past renewed US-Iran tensions and stay positioned for further gains in the S&P 500, arguing that strong corporate earnings and resilient economic conditions should push equity markets higher through the remainder of the year.

The bank’s latest CIO Daily Update comes after Brent crude jumped roughly 6% to above $78 a barrel following fresh US military strikes on Iran and the revocation of a license permitting Iranian oil sales.

President Trump declared the Memorandum of Understanding with Iran “over,” while Tehran accused Washington of breaching last month’s framework agreement. The 10-year US Treasury yield climbed above 4.57%, its highest in nearly a month, and S&P 500 futures slipped 1% ahead of Wednesday’s US session.

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Despite the volatility, UBS maintains that both Washington and Tehran remain incentivized to keep the Strait of Hormuz open, and that periodic geopolitical flare-ups shouldn’t derail the broader bull case for equities.

The bank forecasts 21% earnings growth for global stocks this year, with another 12% increase expected in 2027, citing continued AI-driven strength alongside broader gains in utilities, healthcare, and industrials as manufacturing activity picks up globally.

UBS also expects elevated bond yields to ease as inflation concerns subside and central banks eventually soften their hawkish tone, benefiting shorter- and medium-maturity quality bonds.

Meanwhile, the bank raised its year-end Brent forecast to $85 a barrel, citing shipping disruption risks, and reiterated a positive view on broad commodity exposure—including energy and industrial metals—as a portfolio hedge.