UBS Chief Investment Officer Mark Haefele expects global stock markets to continue climbing over the next two years, driven by resilient earnings growth and a supportive economic environment.
“We expect global equities to rise by around 15% by the end of 2026,” Haefele said, explaining that investors who remain underexposed to equities should consider increasing their allocations.
Haefele highlighted strength across multiple geographies and sectors, maintaining constructive views on U.S. technology, U.S. equities more broadly, and select opportunities in healthcare, utilities, financials, Europe, Japan, China, and emerging markets.
The U.S. remains the anchor of UBS’s outlook. Haefele expects robust earnings growth, elevated profitability levels, and the accelerating influence of AI, energy and resource themes, and longevity-related innovation to support performance into next year. Continued consumer spending, a helpful policy stance from the Federal Reserve, and fiscal support round out the drivers.
UBS forecasts S&P 500 earnings per share will hit $305 in 2026 — a 10% year-over-year increase — and projects the index will reach 7,700 by the end of that year. As has been the case recently, the bank anticipates the Magnificent 7 will again play a major role, contributing roughly half of its projected earnings growth.
On the macro front, UBS expects U.S. real GDP growth to come in just under 2% in 2026, similar to 2025, though growth is expected to accelerate as the year progresses.
Haefele warned that early 2026 could see a soft patch as tariffs temporarily pressure prices and exports. Labor market conditions may also remain subdued, reflecting tighter labor supply and more conservative hiring trends.
However, the bank expects momentum to improve in the back half of the year. Business sentiment should brighten as midterm elections approach, helped by expectations for targeted tax cuts and deregulation, UBS strategists noted.
Household spending is also projected to stay resilient, supported by solid wage gains and strong balance sheets among middle- and higher-income consumers.
UBS forecasts inflation will crest just above 3% in the second quarter. It expects two more Federal Reserve rate cuts before the end of the first quarter, as policy gradually shifts toward a neutral stance.
Haefele noted that while the appointment of a new Fed chair could introduce some volatility, monetary policy is still likely to remain data-driven.