UBS has raised its forecast for UK earnings growth in 2026 to 16%, up from an earlier projection of 11%, citing a supportive macroeconomic backdrop and sustained strength in commodity-linked sectors. The bank also expects 2027 earnings growth of around 9%, reflecting continued cyclical improvement.
The FTSE 100 is currently trading at 12.7 times forward earnings, slightly below its long-term median multiple of 12.8 times since 1990, according to UBS. The investment bank maintained a neutral rating on UK equities but identified pockets of opportunity within the market, favoring banks, industrials, consumer discretionary, and healthcare.
UBS also upgraded its view on European information technology to attractive, signaling a shift in sector preferences amid evolving market dynamics. The bank’s first-half profit strength was attributed to elevated commodity prices and an improving earnings breadth in second-quarter results.
Looking ahead, UBS set a June 2027 central-scenario target for the FTSE 100 at 11,500, up from its August 12 closing level of 10,825. An upside scenario places the index at 12,300, driven by potential gains in commodity prices, a weaker sterling, and supportive policy measures. Conversely, a downside scenario projects the index at 7,700, reflecting risks tied to economic weakness, lower commodity prices, and a sharp rise in bond yields.
