Investing.com — HSBC told clients in a note on Tuesday that the recent shakeout across risk assets has run its course, and a sell signal in its sentiment framework has now faded, keeping the bank firmly positioned for more gains. <\/p>\n
The bank’s chief multi-asset strategist Max Kettner described a challenging two months in which oil rose $30 a barrel after the Middle East conflict flared, Asian memory names sold off 40%, momentum stocks fell sharply and SpaceX’s share price dropped 50% from its intraday high. <\/p>\n
“And, yet, nothing has happened,” he wrote, noting global equities sit about 1% off their early-June record. <\/p>\n
HSBC pointed to several reasons for the resilience. Growth expectations are much lower than earlier this year, and investors have again been too bearish on earnings, with S&P 500 12-month forward EPS upgraded another 5.5% over the past year and a broad-based second-quarter reporting season. <\/p>\n
Valuations have also reset, with the forward price-to-earnings multiple now a full two turns below its 21.5 level at the start of the conflict. <\/p>\n
The firm added that higher bond yields explain why equities have shrugged off oil, and said an unwind of “U.S. exceptionalism” could turn lower yields into a tailwind. HSBC also argued the hyperscaler debt selloff “masks lower issuance and strength elsewhere.” <\/p>\n
With the bad news flow behind it, HSBC remains “max OW equities,” overweight high-yield and emerging-market credit, and underweight Treasuries, Japanese government bonds and oil. Crucially, it said, the sell signal in its sentiment and positioning framework “has now disappeared.” <\/p>\n
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