HSBC Upgrades U.S. Equities to Overweight on AI, Weaker Dollar, and Policy Catalysts

Strategic Upgrade and Key Drivers

HSBC strategists, led by Max Kettner, have shifted their U.S. equity stance to Overweight from Neutral amid:

• Artificial Intelligence Optimism: Renewed confidence in AI innovation driving tech earnings.

• Weaker U.S. Dollar: A softer greenback boosts multinational revenue when translated back into dollars.

• Subdued Positioning: Low current exposure suggests room for catch‑up buying.

• Potential Activity Surprises: Signs of stronger-than-expected business activity fueling equity gains.

They also flag a possible U.S. tax‑cut deal before summer as a near‑term upside catalyst—assuming long‑end yields remain orderly.

Regional and Sector Preferences

HSBC’s current overweight allocations:

• Equities: Emerging Markets, Eurozone, and U.S.

• Fixed Income: Emerging‑market debt and high‑yield credit.

• Hedge: Gold remains the preferred portfolio buffer.

Conversely, they are Underweight:

• Developed‑market government bonds, especially U.S. Treasuries and Japanese JGBs.

Valuation Watch: Sector PE Ratios

Investors can gauge relative value across regions and sectors by using the Sector PE Ratio API, which tracks forward price‑to‑earnings multiples for key market segments.

• U.S. Tech PE vs. Eurozone Financials

• Emerging‑market consumer discretionary

Monitoring these ratios helps identify where the upgrade case may be most justified.

Policy & Event Calendar

HSBC recommends scaling into dips ahead of Q2 earnings and potential tax‑cut legislation. Key upcoming dates include:

• Fed policy meetings (rate guidance)

• U.S. Senate votes on tax proposals

• Q2 corporate earnings season kickoff

Stay informed with the Economics Calendar API for real‑time alerts on:

• FOMC announcements

• Key fiscal policy rollouts

• Major economic data releases

Managing Risks

HSBC acknowledges ongoing uncertainties—from monetary policy shifts to geopolitical events—but points out that historical spikes in economic policy uncertainty have often preceded risk‑asset rebounds rather than further sell‑offs.