Buoyant Stock Market to Face Earnings Reality-Check, UBS Says
- A ‘difficult phase’ for markets as slow down to hurt earnings
- Prefer defensive sectors such as consumer staples, pharma
This article is for subscribers only.
Global equities trading near all-time highs are heading for a “difficult phase” as slowing economic growth starts to dent earnings estimates, according to UBS Group AG strategists.
Forecasts for significant revenue gains in an environment where growth in gross domestic product is stalling is a “very unusual” mismatch, the strategists, lead by Andrew Garthwaite, said in a Monday note. They now expect earnings to disappoint, with profit margins threatened by rising wages and a lagged impact from higher interest rates.