HSBC: Now is a good time to up the ante risk assets

Multi-asset strategists at HSBC believe that now is the time to buy. HSBC notes that while the S & P 500 is less than 5 per cent from its all-time high, sentiment and positioning have clearly suffered. In addition, spreads on high-yield debt have widened by less than 30 basis points since October, and emerging market spreads are still narrowing, which has made the market look strange over the past few weeks. They note that the VIX futures curve has seen a spot premium - an uncommon occurrence, meaning traders see the short-term market as more uncertain than the long-term market. They mostly chalked this up to concerns about the most speculative parts of the market, but even so, the consensus bottom-up forecast now shows an 8 per cent quarter-on-quarter decline in S & P 500 net profit excluding technology. "Such a low forecast sets a lower bar for the fourth quarter earnings season in early 2026, and the Fed's December rate cut should help ease nerves and improve sentiment," they said. HSBC concluded: "This provides a good environment for increasing rather than reducing risk exposure."