HSBC: Now is a good time to increase exposure to risk assets, as market sentiment and positioning have been significantly hit
BlockBeats News, November 24th, Stock Market - especially the tech sector - has been somewhat nervous recently, but HSBC's multi-asset strategist believes that now is the time to buy.
HSBC pointed out that although the S&P 500 index is less than 5% away from its all-time high, market sentiment and positioning have been significantly battered. In addition, the high-yield bond spread has expanded by less than 30 basis points since October, and emerging market bond spreads are still narrowing, making the market in recent weeks appear quite bizarre.
They noted that the VIX futures curve has exhibited contango - which is not common, indicating that traders believe the short-term market is more uncertain than the long-term market. Most attribute this to concerns about the most speculative part of the market, but even so, current bottom-up consensus expectations show that the S&P 500's net profit, excluding the tech sector, is expected to decline by 8% quarter-on-quarter.
They stated, "Such low expectations actually set a lower bar for the fourth quarter earnings season in early 2026, and the Fed's rate cut in December should help alleviate tensions and improve market sentiment." HSBC concluded: "This provides a favorable environment for increasing rather than reducing risk positions." (FX678)
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