LIVE MARKETS-UBS says to stay in stocks, but consider hedges

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UBS SAYS TO STAY IN STOCKS, BUT CONSIDER HEDGES

Concerns about the impact of tariffs and uncertainty over their implementation has sent stocks stumbling with the S&P 500 index .SPX now down around 7.5% from its closing high, and the Nasdaq Composite .IXIC in correction territory.

UBS’ chief investment officer recommends staying invested in the assets, but also offers some hedging ideas to assist with ongoing volatility.

“Our core message remains to stay invested in stocks, with a focus on the US, AI, and power and resources, but also hedging those equity exposures to manage near-term risks,” Solita Marcelli, Chief Investment Officer Americas, UBS Global Wealth Management said in a note on Friday.

“With a 2 April deadline for further tariffs and a looming debt ceiling debate, uncertainty is set to remain high. Investors should also ensure portfolios are well diversified with assets such as quality bonds, gold, and alternatives,” Marcelli added.

UBS notes that capital preservation strategies can help manage downside risks in stocks. In particular, the firm favors high quality fixed income including investment grade corporate bonds, which can provide a hedge against trade risks.

Long dollar/yuan positions could also be used as a trade hedge, while exposures in the Canadian dollar and Mexican peso should be avoided or hedged against in the near-term, UBS says. Gold is also an effective hedge against geopolitical and inflation risks, while some hedge funds strategies can offer portfolio resilience.

“Earnings growth and AI investments should continue to support stocks,” UBS concludes, adding that it still expects the S&P 500 to reach 6,600 by year-end.

(6,600 is 16% above the current SPX level of around 5,685).

(Karen Brettell)

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