Daily Asia

3. August 2026, 23:21 UTC Chief Investment Office GWM Anlageresearch

Earnings strength, disinflation support a constructive outlook UBS House View - Min Lan Tan, Head Chief Investment Office APAC, UBS AG Singapore Branch Mark Haefele, Global Wealth Management Chief Investment Officer, UBS Switzerland AG David Lefkowitz, CFA, CIO Head of US Equities, UBS Financial Services Inc. (UBS FS) Daisy Tseng, Strategist, UBS AG Singapore Branch Andrew Dubinsky, US Economist, UBS Financial Services Inc. (UBS FS) Leslie Falconio, Head of Taxable Fixed Income Strategy, CIO Americas, UBS Financial Services Inc. (UBS FS)

From the studio What to watch: 4 August Podcast: Signal over Noise | AI trade at a crossroads, on Apple or • US June JOLTs job openings Spotify (6 mins) Video: Top of Mind in APAC | The current bull market and risks to • US June balance of trade watch (5 mins)

Thought of the day Global markets had an eventful July, with the re-escalation in US-Iran tensions driving a rebound in oil prices, renewed inflation fears pushing up bond yields, and a reassessment of the AI trade weighing on semiconductor stocks. Brent crude oil rose 23.6%, while the 30-year Treasury yield ended last month at the highest level since 2007. The Philadelphia Semiconductor Index fell 20.6%.

Investor sentiment appeared better at the start of August. Comments from US President Donald Trump raised hopes of diplomatic progress with Iran. He earlier called off an imminent attack in the hope of reaching a deal to reopen the Strait of Hormuz. Megacap tech earnings last week showed that cloud revenue growth accelerated further, and that hyperscaler capital spending in the near term remains strong.

How quickly an agreement will be reached and the Strait reopened are yet to be seen, but our base case remains that energy flows through the waterway should recover gradually over time.

This means robust earnings growth should drive further upside in global equities, and moderating inflation should allow the Federal Reserve to keep interest rates unchanged for the remainder of this year. Separately, while oil may stay below its wartime high, a slower-than-expected normalization of energy supply should keep Brent crude supported. Favorable fundamentals are also supportive of broad commodity exposure.

Broad global earnings strength points to upside in equities. The US second-quarter results season so far has shown strong profit momentum, with both the breadth and magnitude of earnings beats coming in better than historical averages. We continue to see upside risk to our S&P 500 earnings per share growth estimate of 20% for this year, and believe

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resilient consumer spending and improving cyclical strength should support a broadening rally. In Europe, companies are delivering their strongest performance in over three years, with continued upgrades to Stoxx Europe 600 earnings estimates. The region’s outperformance in recent months also underscores our view that investors should seek diversified equity exposure to participate in potential market gains. In Asia, we expect profits to rise 72% this year.

Quality fixed income remains compelling amid elevated starting yields. Longer-maturity bonds sold off toward the end of last week after Fed Chair Kevin Warsh declined to provide details on his policy reaction function or strategy for lowering inflation, sending inflation expectations higher. But we continue to expect data in the coming months to show further disinflation amid fading tariff effects, potentially allowing markets to scale back their expectations on Fed hikes. With the current high starting yields providing a material cushion against rate increases before potential losses are realized, we continue to view quality fixed income as both a source of income and a portfolio hedge, particularly in short- and medium- maturity bonds.

Commodities are a useful portfolio diversifier. The path toward a swift normalization of energy flows through the Strait of Hormuz…