HSBC: Now is a good time to increase risk assets

According to Jinshi reports, the stock market—especially technology stocks—has been somewhat anxious recently, but HSBC's multi-asset strategists believe that now is the time to buy. HSBC pointed out that although the S&P 500 index is less than 5% away from its historical high, market sentiment and positioning have clearly been undermined.

Additionally, the high-yield bond spread has only widened by less than 30 basis points since October, and emerging market bond spreads are still narrowing, which makes the market seem quite strange over the past few weeks. They noted that the VIX futures curve has shown a spot premium—this is uncommon, 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 parts of the market, but even so, the current bottom-up consensus expectation shows that the net profit of the S&P 500, excluding the technology sector, is expected to decline by 8% quarter-over-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 ease tensions and improve market sentiment."

HSBC concluded, "This provides a good environment for increasing rather than reducing risk positions."