Daily Asia

17 August 2026, 21:22 UTC Chief Investment Office GWM Investment Research

Stocks should stay supported despite a potential pickup in volatility UBS House View - Daily Asia Min Lan Tan, Head Chief Investment Office APAC, UBS AG Singapore Branch Mark Haefele, Global Wealth Management Chief Investment Officer, UBS Switzerland AG Jason Draho, Head of Asset Allocation, CIO Americas, UBS Financial Services Inc. (UBS FS) Daisy Tseng, Strategist, UBS AG Singapore Branch Chisa Kobayashi, Head CIO Japan Equity Strategy, UBS SuMi TRUST Wealth Management Co., Ltd. Jon Gordon, Strategist, UBS AG Hong Kong Branch

From the studio What to watch: 18 August Podcast: Signal over Noise with Ulrike Hoffmann-Burchardi. Listen on • UK June unemployment Apple or Spotify (6 mins) Podcast: Jump Start | FOMC minutes, and can the recent AI • Germany ZEW Economic Sentiment Index for August momentum continue? (5 mins) • US July housing starts Video: The AI Show | China tech earnings update and what's next (3 mins) Video: Three reasons why we find Japanese equities attractive (6 mins)

Thought of the day The VIX index remained near its lowest level of this year on Monday, with few major market catalysts expected before late August following the release of US retail sales data. Ahead of NVIDIA’s earnings and Federal Reserve Chair Kevin Warsh’s Jackson Hole speech, the path of least resistance for risk assets is likely higher.

Market calm rarely lasts forever and risks remain, including persistent geopolitical uncertainty. On Monday, markets were again focused on the US-Iran conflict as the US threatened additional economic pressure on Tehran. Additionally, President Trump signaled he wouldn't seek an extension of the memorandum of understanding signed in June. The path toward reopening the Strait of Hormuz remains unclear, while attacks between Russia and Ukraine have intensified again.

But the foundations supporting markets remain intact, in our view. Growth is holding up, earnings expectations are improving, and monetary policy may prove less restrictive than markets currently assume.

The US economy continues to show resilience. While July’s retail sales fell for the first time in nine months and marked the biggest drop since May last year, overall US economic activity remains solid despite the sharp rise in oil prices. Credit card data in recent weeks has not shown much of a spending slowdown, while the spending growth of lower- income households is catching up with that of higher-income consumers. Other recent data also point to resilience, with expanding factory activity

This report has been prepared by UBS AG Singapore Branch, UBS Switzerland AG, UBS Financial Services Inc. (UBS FS), UBS SuMi TRUST Wealth Management Co., Ltd., UBS AG Hong Kong Branch. Please see important disclaimers and disclosures at the end of the document.

suggesting an improving cyclical backdrop.

Corporate earnings have delivered the biggest positive surprise. Earnings growth expectations have risen sharply since the start of the year, reflecting stronger-than-anticipated profitability across corporate America. While earnings growth is unlikely to maintain its current pace indefinitely, revisions remain positive and corporate fundamentals are generally supportive. AI investment remains robust amid encouraging monetization, while strong earnings growth across sectors suggests a broadening of equity market participation.

The policy backdrop may become more supportive. Markets continue to price in more than one Fed hike over the next year. But the recent slew of US economic data has weakened the near-term case for rate hikes— payrolls fell, inflation moderated, and retail sales dropped. Our expectation is that incoming data should show continued disinflation, allowing the Fed to stay on hold and market pricing to move in that direction. A clearer indication of an extended pause this year would likely provide another tailwind for risk assets.

So, while volatility may pick up in the weeks and months ahead, we maintain a constructive outlook for risk assets into year-end. We continue to favor broadly diversified equity exposure across sectors and regions.

Caught our attention China macro…