Trump says Iran war "close to over" amid hopes for more negotiations
Investing.com -- HSBC is maintaining its most bullish positioning on risk assets since Liberation Day, arguing that investors do not need a full resolution of Middle East tensions for markets to continue recovering, just an improvement at the margin.
The bank said its positioning framework continues to send the strongest buy signal for equities seen in months, and pushed back on what it expects will be growing calls for investor complacency as credit spreads and stock prices approach pre-escalation levels.
"'Less bad' news flow is good enough, in our view," the bank said.
HSBC noted that high-frequency activity and labor market data in the U.S. are holding up well, with tax refunds running at almost 15% above 2025 levels, providing an additional cushion for consumers.
The bank's current positioning is maximum overweight equities, with a focus on emerging market Asia, Japan and Europe (European banks in particular) alongside a double overweight on emerging market local rates and an overweight on high-yield credit.
Looking beyond the geopolitical backdrop, HSBC stated that the more important driver of markets is the global earnings outlook.
The firm argued that pessimism toward artificial intelligence over the past two quarters has caused the U.S. technology valuation premium to almost disappear, setting up a rotation back into U.S. and tech stocks following what HSBC described as a likely further V-shaped rebound across asset classes.
The bank flagged a return of U.S. exceptionalism, pushing Treasury yields back above 4.3 as a longer-term risk, describing it as the current threshold for the "Danger Zone" that could weigh broadly on asset classes.
