LIVE MARKETS-A good time to add risk, say HSBC
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A GOOD TIME TO ADD RISK, SAYS HSBC
Stock markets - especially tech - are getting jittery, but HSBC multi asset strategists say they think this is the time to buy.
HSBC flags that sentiment and positioning have taken a big hit, even though the S&P 500 is less than 5% off its all-time high. Add to that the fact that high yield spreads have widened by less than 30bps since October and emerging market debt spreads have been tightening, and one cannot deny it's been a strange few weeks.
They point out that the VIX futures curve is in backwardation - an uncommon situation. It's also a sign traders think near-term market conditions are more uncertain than the longer term - and they calculate a cross asset put call ratio which is in 'outright bearish territory'.
They mostly put this down to worries in the most speculative part of the market, including crypto. But nonetheless, bottom-up consensus now expects S&P 500 net income ex-tech to drop by 8% quarter on quarter.
"Such low expectations create an even lower bar for the Q4 reporting season in early-2026," they say, and "A December (Federal Reserve) cut should help to calm nerves, as well help improve sentiment"
"This provides a good backdrop to add risk, rather than trim it," say HSBC.
(Alun John)
EARLIER LIVE MARKETS POSTS:
BRITISH BUDGET A CLEARING EVENT FOR HOMEBUILDERS, SAY GOLDMAN CLICK HERE
CHEAPER GLP-1 DRUGS COULD PUT PACKAGED FOODS ON A CRASH DIET SAYS PIPER SANDLER CLICK HERE
EYES ON PEACE TALKS CLICK HERE
EUROPE BEFORE THE BELL: CATCH UP AND THEN WHAT? CLICK HERE
MORNING BID: HOLIDAY WEEK COULD BE PRIME TIME FOR YEN INTERVENTION CLICK HERE
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