HSBC Strategists Maintain Bullish Stance Despite Oil Price Surge

Deep News00:30

Strategists at HSBC Holdings PLC have indicated that the renewed escalation of conflict involving Iran has not prompted them to alter their bullish outlook on risk assets; they believe the second-quarter earnings season is a more significant driving factor.

A team led by Max Kettner stated that the narrative of "excessively high consensus expectations in the U.S." fails to account for the fact that expectations for quarterly earnings growth quarter-over-quarter "remain quite low."

"The Q2 earnings season could perform as well as Q1, especially in the United States."

These strategists noted that their sentiment and positioning frameworks have not yet issued any sell signals, adding that the positioning of systematic investors "remains broadly neutral."

They also suggested that the unexpected decline in U.S. June CPI could be an early sign that U.S. exceptionalism is beginning to fade. This might initially serve as a "welcome boost" for risk assets, but could evolve into a painful trade if U.S. Treasury yields fall and the yield curve steepens again.

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