HSBC strategist Max Kettner remains firmly bullish on global risk assets, arguing that investors are premature in calling for a “buy the rumor, sell the fact” reaction to easing Middle East tensions.
Kettner said HSBC’s sentiment and positioning models continue to support equities and are “not sending a sell signal yet.”
“Most notably, we think systematic strategies have some further room to buy. So any potential further supportive news flow from the Middle East may well lift risk assets and lead to a more broad-based equity rally again,” he wrote.
He added that systematic investors still appear under-positioned, limiting the market impact of potential negative headlines.
HSBC therefore continues to maintain its strongest overweight allocation to global equities, particularly in U.S. and Asian markets, alongside sizable overweight exposure to emerging-market local debt and high-yield credit.
Meanwhile, the bank remains most underweight U.S. Treasuries relative to European sovereign debt.
Kettner pointed to robust corporate earnings as a major driver behind the bullish stance. Excluding technology companies, S&P 500 first-quarter net income rose 11% sequentially, while earnings surprises reached their strongest level since the post-pandemic reopening period.
Notably, U.S. technology companies avoided any below-consensus EPS results during the quarter.
HSBC also highlighted that consensus forecasts for 2026 S&P 500 earnings continue moving higher rather than following the normal pattern of downward revisions.
The bank added that U.S. consumption trends still suggest economic momentum is improving, supported by healthy household balance sheets, strong employment conditions and tax refund flows.
While some softening has appeared in credit card spending data, HSBC believes much of it reflects distorted comparisons caused by tariff-related spending pull-forwards last year.
In contrast, Europe’s outlook appears weaker, with business confidence indicators such as Germany’s ifo survey signaling softer activity.
As a result, HSBC continues favoring European bonds over U.S. Treasuries, prefers U.S. consumer discretionary equities over European peers, and remains constructive on European financial stocks.
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