China’s Services Sector Posts Slowest Growth in Five Months as Demand Softens 
Europe Confronts Rising Competitive Pressure as China Accelerates Export-Led Growth 
Dollar Slides to Five-Week Low as Asian Stocks Struggle and Markets Bet on Fed Rate Cut 
Dollar Weakens Ahead of Expected Federal Reserve Rate Cut 
BOJ Faces Pressure for Clarity, but Neutral Rate Estimates Likely to Stay Vague 
Asian Currencies Steady as Markets Await Fed Rate Decision; Indian Rupee Hits New Record Low 
European Oil & Gas Stocks Face 2026 With Cautious Outlook Amid Valuation Pressure 
Asia’s IPO Market Set for Strong Growth as China and India Drive Investor Diversification 
Germany’s Economic Recovery Slows as Trade Tensions and Rising Costs Weigh on Growth 
Asian Markets Mixed as Fed Rate Cut Bets Grow and Japan’s Nikkei Leads Gains 
Asian Markets Stabilize as Wall Street Rebounds and Rate Concerns Ease 
Gold Prices Edge Higher as Markets Await Key U.S. PCE Inflation Data 
Citi Sets Bullish 2026 Target for STOXX 600 as Fiscal Support and Monetary Easing Boost Outlook 
Gold Prices Steady as Markets Await Key U.S. Data and Expected Fed Rate Cut 
U.S. Futures Steady as Rate-Cut Bets Rise on Soft Labor Data 
UBS has raised its outlook on European equities ahead of the second-quarter earnings season, highlighting potential upside in select company results despite muted regional forecasts. The bank’s European Equity Strategy update notes that Q2 earnings growth is expected to remain subdued, with full-year 2025 projections trimmed to just 2%. This cautious stance stems from continued macro headwinds, including trade tariffs and unfavorable currency moves.
Earnings momentum in Europe has stagnated, with no significant growth recorded since 2022—continuing a broader trend of flat performance between 2010 and 2016. Nevertheless, UBS maintains a constructive medium-term view, forecasting a return to earnings growth in 2026, driven by cyclical sectors benefiting from fiscal stimulus and improved consumer spending.
In the near term, however, the spotlight is on company-specific earnings surprises and guidance. UBS analysts have conducted a cross-sector review and identified 21 companies likely to outperform expectations and 10 names that may warrant caution. These picks are based on sector forecasts and crowding data from UBS Quant Research, which gauges investor positioning intensity.
UBS notes that even modest earnings beats or reaffirmed guidance could trigger positive stock reactions given the low expectations heading into the quarter. Commentary that offers insight into 2026 performance is expected to resonate well with investors.
The firm’s increased conviction stems not from a broad macro recovery but from differentiated earnings dynamics at the company level. As valuations across the region remain selectively attractive, the Q2 earnings season is poised to be a critical test for the “Case for Europe.” UBS believes companies showing cost discipline, resilience, or sector-specific strength could emerge as key outperformers in an otherwise cautious environment.
