Barclays now sees two Fed cuts this year, says jumbo Fed cuts ’very unlikely’
Investing.com -- UBS is maintaining a Neutral outlook on U.K. equities, recommending selective exposure as corporate earnings face another year of contraction before a recovery begins.
The bank expects U.K. earnings to shrink 3% in 2025, following a 17% slide over the past two years, before rebounding with 5% growth in 2026 and potentially faster gains in 2027, according to a recent report by Matthew Gilman, CIO Equity Strategist at UBS.
Near-term challenges include weak global growth from U.S. tariffs, currency pressures from a strong pound, and subdued commodity prices. These headwinds underpin UBS’s cautious stance despite a more constructive medium-term outlook for Europe.
For U.K. investments, UBS favors high-quality, resilient companies tied to structural growth or supportive policy shifts, with technology, industrials, and real estate identified as preferred sectors.
The bank sees muted near-term returns, largely driven by the FTSE 100’s 3.6% dividend yield, with a June 2026 upside target of 10,300 and a downside scenario of 7,000.
Potential upside catalysts include progress on U.S. trade deals, U.S. investor inflows, stronger commodities, or pound weakness, while risks stem from global slowdown, sticky inflation, weak commodities, or further sterling strength.