Market News

  • Asset allocation Sheltering from tariff turbulence in Asia

    • by Julian Wee
    • 02 Apr 2025

    Risk aversion seems to have returned on the back of tariff and geopolitical concerns, and might linger as the Trump administration mulls its probe into its trading partners’ alleged unfair trading practices. Asia’s equity markets are likely to be affected, especially with China likely to be a key tariff target. Investors can, however, mitigate some of this damage to portfolio returns by focusing their Asian exposure, both geographically and sectorally. Taiwan and India remain our favored major Asian markets, while Malaysia and the Philippines are also Attractive.

  • Asset allocation FX positioning to buffer against tariff turbulence

    • by Julian Wee
    • 26 Mar 2025

    As we approach April and its potential tariff-related developments, markets seem to be fairly sanguine about the events to come. While we urge investors to be wary, they should avail themselves of opportunities in FX markets to position appropriately. These include selling EURGBP upside risk, AUDUSD downside risk, and going long AUDCHF outright.

  • Thought of the Week Diversification and selectivity in times of uncertainty

    • by Daniel Kalt
    • 21 Mar 2025

    US tariff and foreign policy are creating a market environment characterized by uncertainty and increased volatility. We recommend ensuring a high level of diversification and selectively taking advantage of individual market opportunities.

  • Japan Earlier BoJ hike would support JPY appreciation

    • by Julian Wee
    • 21 Mar 2025

    The BoJ kept policy rates unchanged while maintaining a balanced tone on the justification versus impediments to further rate hikes. The recent strengthening of economic momentum in Japan though suggests the next hike might happen earlier, in July, followed by another by March 2026 before a pause. To manage the level of national debt, the BoJ will need to carefully manage the rise of policy rates and JGB yields. The BoJ’s policy stance though supports our current Neutral stance on Japan equities, and our expectation of a gradual USDJPY decline over the coming months.

  • Asset allocation Wait for dips to buy into medium-term positives

    • by UBS Editorial Team
    • 19 Mar 2025

    Markets enjoyed a revival in optimism at the end of last week, with the VIX falling sharply and the S&P 500 ending a negative week strongly. Investors should remember that we might be on the cusp of an intensification of tariff tensions, which could lead to a rise in volatility and risk aversion. For now, investors should stay invested but focus on geographical areas and sectors that might be better able to withstand the impact of tariffs.

  • Asset allocation Diversification can help navigate market volatility

    • by Christopher Swann
    • 14 Mar 2025

    Investors have been kept in a state of heightened anxiety in recent weeks by a combination of trade tensions, geopolitical shifts, and economic uncertainty. But in such times, investors should not lose sight of timeless investment principles. The latest UBS-sponsored Global Investment Returns Yearbook, which charts market performance over the past 125 years, underlines the merits of diversification, especially in periods of volatility.

  • Commodities Portfolio diversification from precious commodities

    • by Julian Wee
    • 14 Mar 2025

    With risk aversion rising and the US imposing commodity-specific tariffs, some investors might be concerned about commodities exposure. We would instead urge investors to consider the fundamental supports for commodities as a whole, and the individual components. The asset class has the capacity to deliver decent diversification benefits for traditional bond-equity portfolios. With volatility likely to be elevated in the near term, gold remains a key portfolio hedge, while silver, copper and Brent crude offer volatility-selling opportunities to boost portfolio income.

  • Japan Ride the Yen rise for yield pickup

    • by Julian Wee
    • 11 Mar 2025

    With tariff uncertainty rising, domestic policy turning more hawkish, and the yen appreciating sharply, investors might start getting antsy about the extended bout of stability the TOPIX has enjoyed. While tariffs could indeed lead to a dip in the TOPIX in the near term, long-term investors should look upon these as potential entry opportunities. For now, investors can make use of the trend decline in the USDJPY to sell upside risk in the pair at or above 152 for yield pickup.

  • India Ride the rebound in Indian equities

    • by Julian Wee
    • 10 Mar 2025

    A nascent rebound in the Nifty 50 after a 4-month slide may understandably be viewed by investors with caution. Investors might be tempted to sell into the rally and reduce their exposure given the risk of reciprocal tariffs in April. However, we would urge patience and restraint given that the latest data point to a stabilization in growth and policy remains supportive. We expect that the improving macroeconomic environment should contribute to stronger EPS growth, underpinning our continued Attractive view on Indian equities.

  • Thought of the Week Insights from 125 years of investment experience

    • by Daniel Kalt
    • 06 Mar 2025

    The “UBS Global Investment Returns Yearbook 2025” draws on 125 years of market performance data across major asset classes to offer a wealth of insights and advice for investors, including those in Switzerland.

  • Asset allocation German spending plans raise hopes for an economic lift

    • by UBS Editorial Team
    • 06 Mar 2025

    The winner of Germany’s recent election has announced plans to boost spending on defense and infrastructure, contributing to a rally in German equities and a swift rise in government bond yields. While the extra spending, if approved by lawmakers, will take time to feed into the economy, the fiscal shift has the potential to support economic growth and equity markets.

  • Asset allocation Navigating the fog of (trade) war

    • by Julian Wee
    • 04 Mar 2025

    After two months of financial markets being sanguine about the risk of economic disruption from tariffs, this narrative began to darken in the latter half of January. Although risk aversion and volatility are likely to continue rising in the near term, investors would do well to stay invested given robust global growth fundamentals. We recommend a nuanced response of curating risk exposure to markets with strong domestic drivers, to counterbalance tariff risks. Portfolios can be further protected by owning certain defensive assets like gold, as well as using idle cash to generate durable income to stabilize portfolio returns.

  • Thought of the Week Continued fast development in the technology sector

    • by Daniel Kalt
    • 28 Feb 2025

    Given the fast development and innovative power, we see good opportunities in an increasingly bipolar (technology) world, both in the global (excluding China) and the Chinese end market for AI and its applications.

  • China For China, tariff risks loom against tech reprieve

    • by Julian Wee
    • 28 Feb 2025

    The impressive surge in the MXCN, on the back of a lull in tariff tensions and the surprise DeepSeek reveal, seems to have come to a pause, at least. The tech sector positives though look set to continue, as the multi-year regulatory crackdown appears to have ended. The tariff situation will likely hinge on the second round in April, but we expect this to be manageable. For now, we remain Neutral on the MXCN with the internet sector outperforming.

  • House View, Markets, Asset allocation Monthly Letter: Part of the deal

    • by UBS Editorial Team
    • 27 Feb 2025

    US presidents typically start their terms by making bold promises, but this time, the volume, breadth, and speed of executive action are causing unusual levels of uncertainty. Our latest monthly letter explores what this means for investors and how to position portfolios. While volatility may rise, the US economy remains solid, and key growth themes like AI and electrification should stay intact. We recommend investors focus on US equities, AI, and power and resources, while ensuring portfolios are well diversified with assets including quality bonds, gold, and alternatives.

  • FX Treat the return of risk appetite with caution

    • by Julian Wee
    • 25 Feb 2025

    The USD’s broad fall in recent weeks suggests a gradual return of risk appetite in financial markets. We worry that the market’s optimism is premature and that it is being complacent about tariff risks. We believe investors should remain vigilant and continue to protect portfolios against spikes in risk aversion from multiple sources. This can be done via going long AUDSGD and silver, while selling both upside risk in EURUSD and downside risk in USDCAD.

  • Thought of the Week Will the ‘Pax Europaea' succeed?

    • by Daniel Kalt
    • 20 Feb 2025

    Even though the challenges are enormous and it is still unknown whether or not Europe will succeed in establishing a "Pax Europaea" on the European continent after the "Pax Americana" era, which appears to be coming to an end, we continue to see a wide variety of investment opportunities that can be used to navigate this politically difficult environment.

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