UBS advises clients to reduce US concentration risk by increasing exposure to European and Asian equities as the global rally broadens.
UBS maintains a positive outlook for the S&P 500 but warns of volatility tied to shifting Federal Reserve policy expectations. The bank sees further upside in global equities, emphasizing diversification beyond US markets to mitigate concentration risks.
The recommendation aligns with strong Q2 earnings in Europe, where the Stoxx Europe 600 reported its strongest profit growth since 2022. UBS highlights sectors like banks, healthcare, and industrials, driven by spending on defense, infrastructure, AI, and energy security. In Asia, robust earnings growth forecasts support the case for broader exposure.
UBS frames the shift as a strategic move to participate in a broadening rally rather than relying solely on US equities. The bank’s preference for European and Asian markets is underpinned by fundamental trends, including Germany’s fiscal stimulus and thematic investment opportunities.