HSBC: Now is a good time to increase risk assets, as market sentiment and position have clearly been undermined.

On November 24, the stock market—especially technology stocks—has been a bit tense recently, but HSBC's multi-asset strategists believe that now is the time to buy. HSBC points out that although the S&P 500 index is less than 5% away from its historical high, market sentiment and positions have clearly been affected. Moreover, the high-yield bond spread has only widened by less than 30 basis points since October, and emerging market bond spreads are still narrowing, making the markets over the past few weeks appear rather strange. They note that the VIX futures curve has shown spot contango—this is uncommon, indicating that traders believe the short-term market is more uncertain than the long-term market. They largely attribute this to concerns about the most speculative part of the market, but even so, the current bottom-up consensus expectations indicate that the net profit of the S&P 500, excluding the technology zone, will 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 ease tensions and improve market sentiment.” HSBC concluded, “This provides a good environment for increasing rather than reducing risk positions.” ( Jin10 )