Global equities are extending their advance beyond technology-led gains, according to UBS, which upgraded earnings and capital expenditure forecasts while warning of key risks including geopolitical tensions and rising yields.
The bank raised its 2025 earnings growth estimate for the MSCI AC World index to 26% from prior projections, while lifting its 2026 outlook to 14%. Capital expenditure growth forecasts were similarly adjusted, with an 84% increase expected this year and 33% next year, reflecting stronger corporate investment momentum.
UBS strategists, including Ulrike Hoffmann-Burchardi, noted that the MSCI AC World’s 12-month forward price-to-earnings ratio has nearly reverted to its 10-year average, currently sitting about 15% below its November peak. The valuation reset follows a pause in global equity gains during June and July, with markets resuming their upward trajectory in August amid a constructive macro backdrop.
Expansionary fiscal policies across major economies and a rebound in manufacturing purchasing managers’ indices into expansion territory have supported the rally. UBS also anticipates easing inflation as tariff-related pressures subside, reducing the likelihood of a sustained interest rate hiking cycle.
Technology remains a primary beneficiary, particularly semiconductors, while signs of monetization at hyperscalers have reinforced confidence in AI-related spending translating into tangible business opportunities. The bank maintained an Attractive view on global equities, explicitly upgrading European technology and Taiwan to reflect broadening participation in the rally.
UBS flagged potential headwinds, including the timing of a Strait of Hormuz reopening and the risk of rising bond yields disrupting equity valuations. The strategists emphasized that while technology sectors are likely to retain leadership, earnings growth and performance are expected to broaden across the broader market.
