How to invest in Q4? UBS says buy stocks, gold and sell dollar

Investing.com -- UBS advised investors to put cash to work in the fourth quarter, highlighting equities, gold, and select currencies as preferred opportunities while cautioning against holding excess U.S. dollars.

“As we enter the fourth quarter, investors face important questions: How do I make my cash productive, with rates low in Europe and now falling in the US?” the bank wrote. UBS said the Federal Reserve’s first rate cut since December 2024 “signals the resumption of the rate-cutting cycle,” adding it expects “three cuts of 25bps between now and the first quarter of 2026.”

With U.S. rates heading lower, UBS said investors should “limit cash holdings to those needed for near-term expected portfolio withdrawals” and instead phase excess liquidity into diversified portfolios.

Equities remain central to the bank’s strategy. “We believe lower interest rates, robust earnings growth, and AI tailwinds will support further upside for global equities over the coming year,” UBS said, adding that investors should “consider phasing in and using market dips to add exposure.”

UBS also urged investors to focus on “transformational innovation,” citing artificial intelligence, grid infrastructure, and longevity as areas likely to outperform. “We expect the global obesity drug market to reach USD 200 billion by 2030,” the bank noted, while also pointing to opportunities in oncology and medical devices.

Gold remains a key hedge. “The yellow metal remains an effective portfolio diversifier and hedge against political and economic risks,” UBS wrote, supported by lower real interest rates, strong central bank demand, and fiscal concerns.

On currencies, UBS said: “We expect the US dollar to resume its downward trend in the months ahead” and recommended the euro, Australian dollar, and Norwegian krone.