The brokerage firm UBS has recently revised its year-end forecast for the MSCI All Country (AC) World index for 2024, upping it from 800 to 830. This decision was influenced by several factors including improving equity risk appetite, optimism surrounding artificial intelligence, and the potential slowing of U.S. wage growth.
UBS strategists have noted that key factors contributing to the positive outlook for global equities include expectations of monetary policy easing by major central banks, weaker global economic data, and the excitement surrounding advancements in artificial intelligence. The market appears to be responding positively to weaker data at a faster pace than anticipated.
One of the most significant factors driving this optimism is the potential impact of artificial intelligence on productivity growth. If GenAI were to increase productivity growth by just 1% starting in 2028, the equity risk premium could potentially reach 4.7%. Additionally, other factors such as earnings revisions and a possible pause in interest rates by the U.S. Federal Reserve are expected to further support the global equity market.
Overall, UBS remains optimistic about the performance of global equities and has revised its forecast for the MSCI All Country (AC) World index to indicate a positive outlook with a 6% ‘upside’ potential by the end of 2024.
