HSBC Upgrades US Equities to Overweight Amid Strong Earnings and Easing Risks
US stocks today: HSBC turns bullish on US equities citing earnings momentum
The Economic Times
Image: The Economic Times
HSBC has upgraded its outlook on U.S. equities to overweight, citing strong earnings momentum and reduced geopolitical risks. In contrast, it downgraded European stocks due to weaker economic activity and energy price concerns. The brokerage noted that 84% of U.S. companies reporting earnings have exceeded expectations this quarter.
- 01HSBC upgraded U.S. equities to overweight, citing strong earnings momentum.
- 0284% of U.S. companies reporting earnings have beaten Wall Street expectations.
- 03The brokerage downgraded Europe ex-UK to neutral due to economic weakness.
- 04S&P 500 buybacks reached $430 billion year-to-date, a 20% increase year-on-year.
- 05HSBC prefers sectors with lower commodity exposure, like banks and technology.
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HSBC has upgraded its stance on U.S. equities from neutral to overweight, driven by robust earnings momentum and a decline in geopolitical risks. The brokerage highlighted that nearly 30% of U.S. companies have reported earnings for the first quarter, with 84% surpassing Wall Street expectations by an average of 12%, which is above the five-year average. Additionally, S&P 500 buybacks have totaled $430 billion year-to-date, reflecting a 20% year-on-year increase. In contrast, HSBC downgraded European equities to neutral, citing weaker economic activity and vulnerability to rising energy prices. The firm also noted that sectors with lower exposure to commodity prices, such as banks, insurance, and technology, are preferable. Furthermore, HSBC upgraded global Basic Materials to overweight, indicating strong earnings revisions amid a broader commodity squeeze, while downgrading the health care and industrials sectors to neutral.
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The upgrade in U.S. equities could lead to increased investor confidence, potentially boosting stock prices and benefiting sectors like banks and technology, which may positively impact employment and economic growth.
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