HSBC strategist urges caution against locking in gains as global equity rally extends
With sentiment indicators not yet signalling a sell, HSBC continues to favour U.S. and Asian equities while maintaining a significant underweight in U.S. Treasuries relative to European government bonds.
HSBC chief multi-asset strategist Max Kettner has retained an aggressively bullish stance on global equities, advising investors against rushing to lock in profits despite easing tensions in the Middle East. In a research note, Kettner argued that the bank’s combined sentiment and positioning indicators are not yet sending a sell signal, rejecting the notion that markets have fully priced in recent geopolitical optimism. He noted that systematic strategies still have room to buy, suggesting that any further supportive news flow from the region could lift risk assets and trigger a broader equity rally.
The bank continues to hold its maximum overweight allocation to global equities, including U.S. and Asian markets. This optimism is underpinned by one of the strongest corporate earnings seasons since markets reopened following the pandemic. Excluding technology companies, first-quarter S&P 500 net income rose 11 per cent quarter-on-quarter, with the earnings beat rate reaching its highest level since the post-COVID rebound in 2021. Notably, no major U.S. technology company reported earnings per share below consensus forecasts during the quarter.
Analyst expectations for 2026 S&P 500 earnings continue to trend higher, defying the typical pattern of downward revisions over the course of the year. On the macroeconomic front, HSBC highlighted that U.S. consumer data points to renewed momentum, supported by resilient high-income households, strong labour market conditions, wealth effects, and tax refunds. While some weakness has appeared in high-frequency credit card spending data, the bank attributed this mainly to base effects linked to tariff-related front-loading that boosted spending levels during the same period last year.
In contrast, the outlook in Europe remains weaker. Business surveys, including Germany’s ifo index, suggest slowing activity across the region. Consequently, HSBC maintains its strongest underweight position in U.S. Treasuries, particularly relative to European government bonds. The bank prefers U.S. consumer discretionary stocks over their European counterparts and, within European equities, maintains a preference for financial shares.
HSBC also retains a more-than-double overweight position in local emerging-market debt and remains overweight in high-yield credit. Kettner argued that downside risks tied to negative headlines remain limited because systematic investors are still relatively lightly positioned. This positioning allows for further buying pressure, reinforcing the bank’s conviction that equities remain the preferred asset class over fixed income in the current environment.
