HSBC analysts Willem Sels and Lucia Ku have reiterated a positive six-month outlook for US equities and USD investment grade credit, citing several supportive factors for the US market [1]. The United States' position as an energy exporter, alongside robust projected earnings growth and strong technology and AI-related investment, are highlighted as key drivers of market resilience [1]. Specifically, HSBC projects a 15% increase in US earnings by 2026, with technology and AI-related investments continuing to drive revenue growth and productivity gains across multiple sectors, including Industrials, Communications, and Materials [1].
The analysts note that ongoing infrastructure buildout, such as data centres, and structural opportunities are bolstering broader economic activity [1]. They also point to Fed easing, increased M&A activity, and a recovery in capital markets as additional supports for the US outlook [1]. Despite the ongoing Middle East conflict, HSBC assesses that stagflation risks remain low, with resilient economic growth and solid corporate earnings underpinning continued innovation and sector-wide productivity gains [1].
HSBC maintains its preference for US equities and USD investment grade credit due to the market's earnings resilience, leadership in innovation, and relative macro stability. However, the analysts stress the importance of diversification across regions, sectors, and currencies to mitigate concentration risk [1].
CONCLUSION
HSBC's positive outlook for US equities and credit is underpinned by strong earnings projections, robust AI and technology investment, and macroeconomic stability. While the risk of stagflation is viewed as low, the bank advises investors to diversify across regions and sectors to manage risk. Overall, the market sentiment is optimistic, supported by concrete growth and innovation drivers.