Live Markets-Room to keep rising
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STOXX 600 up 0.45%
UK defence stocks rise
Wall St futures higher
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(Sophie Kiderlin)
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Markets have room to keep rising
The latest developments in the Middle East may be weighing on risk sentiment, and investors might be worried about the outlook for capex growth - but global equities have space to keep rising, according to Mark Haefele, chief investment officer at UBS Global Wealth Management.
Developments in the Middle East are "fluid" and a retightening of oil markets poses a risk to a rally in equities, Haefele said in a note, but "both sides are incentivized to avoid a return to full-out war."
"While shipping confidence and oil production may take longer than expected to be fully restored, we expect limited pass-through to core inflation, keeping central banks from tightening aggressively," he said - which means earnings growth should keep driving equity markets.
Meanwhile AI demand is expected to keep growing, and recent earnings from the likes of ASML show that AI infrastructure demand is resilient, "but we think investors should ensure a more balanced exposure to tech as the AI growth story continues to evolve," Haefele said.
