UBS: Investors to Shift Focus from Middle East Issues to Economic and Earnings Fundamentals, US Stocks Remain Attractive

Odaily News UBS pointed out in a research report on April 16th that, based on the bank's baseline scenario, a final diplomatic resolution to the Middle East conflict will enable investors to refocus on healthy economic and earnings fundamentals. The bank stated that during the escalation of the Middle East crisis, it has consistently viewed global and US equity markets as remaining attractive. The bank expects the US Q1 earnings season to be strong, highlighting an optimistic outlook for corporate profits, with earnings per share projected to grow by 17% this quarter, which would be the fastest growth rate since Q4 2021. However, the bank also anticipates that the path to a long-term ceasefire in the Middle East will be fraught with challenges, and even if shipping resumes through the Strait of Hormuz, the global energy market will need time to return to normal. Therefore, we recently raised our Brent crude oil price forecast for the end of June from the previous $90 per barrel to $100 per barrel. Considering the outlook for the energy market, we have become more cautious towards equity markets most sensitive to high fuel costs (including the Eurozone and India), and have downgraded their rating from "attractive" to "neutral". (Jin10)