HSBC: Now is a good time to increase exposure to risk assets, as market sentiment and positioning have been significantly hit

November 24th, in the stock market - particularly the tech sector - there has been a certain degree of nervousness recently. However, the multi-asset strategist at HSBC believes that now is the opportune time to make purchases. HSBC pointed out that although the S&P 500 index is within less than 5% of reaching its all-time high, market sentiment and positioning have been significantly impacted. In addition, since October, the high-yield bond spread has only expanded by less than 30 basis points, and emerging market bond spreads are still narrowing. This has made the market in recent weeks appear rather strange. They noted that the VIX futures curve has shown contango, which is not a common occurrence. This indicates that traders believe the short-term market is more uncertain than the long-term market. Most attribute this to concerns about the most speculative part of the market. Nevertheless, current bottom-up consensus expectations show that the S&P 500's net profit, excluding the tech sector, is expected to decline by 8% quarter-on-quarter. They stated, "Such low expectations actually set a lower threshold for the fourth quarter earnings season in early 2026. And the Fed's rate cut in December should help relieve tensions and enhance market sentiment." HSBC concluded: "This creates a favorable condition for increasing rather than reducing risk positions." (FX678)