UBS says markets may be underestimating the persistence of the current earnings cycle, a misread that outweighs geopolitical noise from the Strait of Hormuz. The bank's base call is that energy flows through the strait will recover gradually rather than rebound sharply, and strong earnings growth will continue to underpin equity markets. UBS highlights a robust US Q2 reporting season — breadth and magnitude of beats above historical norms — and flags upside risk to its S&P 500 EPS forecast of 20

UBS says markets may be underestimating the persistence of the current earnings cycle, a misread that outweighs geopolitical noise from the Strait of Hormuz. The bank's base call is that energy flows through the strait will recover gradually rather than rebound sharply, and strong earnings growth will continue to underpin equity markets. UBS highlights a robust US Q2 reporting season — breadth and magnitude of beats above historical norms — and flags upside risk to its S&P 500 EPS forecast of 20% growth for the year; resilient consumer spending and improving cyclical forces should help gains broaden beyond mega-cap names. In Europe, companies are delivering the strongest results in over three years and Stoxx 600 earnings estimates are being revised up, reinforcing a recommendation for diversified equity exposure to capture market upside. UBS expects Asian corporate profits to rise 72% this year.