Investing.com - Global stock markets face a backdrop rife with geopolitical uncertainties and trade tensions, but can still add on to gains posted at the beginning of this week, according to analysts at UBS.

Shares on Wall Street were mixed in early dealmaking on Tuesday, as investors returned for a holiday-shortened trading week focused on talks between the U.S. and Russia aimed at ending the war in Ukraine. The main U.S. averages were closed on Monday in observance of the Presidents Day holiday.

Overseas markets provided a strong handover, with stocks in Europe hovering near record high levels, bolstered in particular by defense names. European leaders have said they would bump up military spending and become the main guarantor of Ukraine's security, with analysts noting signals from the White House that the U.S. may no longer be relied upon to backstop the continent's defense.

Shares in Hong Kong also climbed to almost three-year highs as traders eyed a rare meeting between Chinese President Xi Jinping and domestic business leaders.

The gains come even as the trading environment appears "far" from what is typically conducive to driving appetite for riskier assets like stocks, the UBS analysts led by Mark Haefele said in a note to clients.

"[W]e continue to favor global equities in our portfolios, and view the U.S. and Asia ex-Japan markets as [a]ttractive. We also see opportunities in the Eurozone," Haefele wrote.

Robust earnings should underpin further advances in U.S. stocks in particular, Haefele said. S&P 500 companies are on track to have lifted fourth-quarter earnings by 15.4% compared to a year earlier, versus expectations of a 9.6% jump as of January 1, according to LSEG IBES data cited by Reuters. Key reports are due out from retail giant Walmart (NYSE: WMT ) and artificial intelligence-darling Nvidia (NASDAQ: NVDA ) in the coming days.

Haefele also argued that U.S. President Donald Trump's proposed tariffs may be more targeted measures rather than blanket levies "given the White House's focus on growth and lower inflation." Investors have seemed to move past the initial ructions sparked by the emergence of a low-cost artificial intelligence model from Chinese start-up DeepSeek earlier this year as well, Haefele noted.