Is the global equity rally broadening? UBS weighs in

Investing.com -- UBS told clients in a note that global equities resumed their advance in August after a pause in June and July, and it expects the rally to widen beyond the technology names that have led it.

The bank raised its earnings growth estimates to 26% this year and 14% next year. "While technology sectors are likely to remain leaders, we expect earnings growth and performance to broaden," strategists including Ulrike Hoffmann-Burchardi wrote.

UBS described the macro backdrop as constructive, pointing to expansionary fiscal policy across most major economies and manufacturing PMIs returning to expansion territory after years of contraction. It expects inflation to ease as tariff headwinds recede, and sees a low likelihood of a sustained hiking cycle.

On the structural side, the bank raised its capital expenditure growth forecasts to 84% this year and 33% next, after hyperscalers again guided higher.

UBS said semiconductors benefit directly and remain a preferred technology segment, while growing signs of monetization at hyperscalers have reassured investors that AI spending is translating into business opportunities.

Notably, the bank said earnings growth has outpaced price gains in recent months, normalizing valuations. The MSCI AC World's 12-month forward price-to-earnings ratio is almost back in line with its 10-year average and nearly 15% below its November peak.

UBS maintained an Attractive view, upgrading European tech and Taiwan, and flagged the timing of a Strait of Hormuz reopening and rising yields as key risks.

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