LIVE MARKETS-UBS eyes stock gains, fleeting geopolitical impacts

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UBS EYES STOCK GAINS, FLEETING GEOPOLITICAL IMPACTS

While UBS market watchers see some volatility following the U.S. military's weekend strike on Venezuela, they looked at history in order to assess the potential market impact and found some reassurance.

Ulrike Hoffmann-Burchardi, chief investment officer for the Americas and global head of Equities at UBS Financial Services led a research note recalling that in the last 11 major geopolitical events, the S&P 500 was on average just 0.3% lower a week after the event and 7.7% higher 12 months afterwards.

Excluding worries over tariffs, Hoffmann-Burchardi notes that markets barely reacted in the past to "even relatively major geopolitical developments, such as the US bombing of Iran."

Instead, she sees investors focusing more on news about artificial intelligence $(AI)$, earnings, and Federal Reserve policy. So she sees the political situation in Venezuela as neither "a significant source of concern for markets or a reason for optimism."

The CIO concedes that the developments may cause volatility, and especially in oil markets, but that investors will stay focused on fundamentals.

With this in mind she writes that UBS is forecasting "nearly 10% earnings growth for the MSCI All Country World for both 2026 and 2027, contributing to further stock gains this year."

So with this backdrop the firm sees global equities as attractive.

"If investors are currently underallocated, we believe they should reallocate excess cash, bond, or high yield credit holdings to stocks," Hoffmann-Burchardi writes.

However she also sees safe-haven gold as a "universal portfolio hedge" with a target price of $5,000 per ounce by mid-year 2026 and recommends that investors include a mid-single digit percentage exposure to the percious metal in their portfolios.

Meanwhile, on Monday MSCI's All Country World price index .MIWO00000PUS hit a record high and was last up 0.9% on the day while spot gold XAU= was up 2.7% at around $4448 /oz.

(Sinéad Carew)

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