2026-03-16 07:04
Key takeaways Conflict in the Middle East caused energy prices to surge, stagflation risks to emerge, and has shaken markets… …at a time when the US Supreme Court’s decision to strike down IEEPA tariffs and some negative AI-related headlines… …had already taken the shine off what has been a pretty good start to 2026 for global growth and inflation. Global uncertainty surged following the effective closure of the Strait of Hormuz, through which about 20% of global crude oil and LNG transits. The reduced flow of energy trade and output caused the oil price to spike to nearly USD120/bbl until comments by President Trump that the war was “very complete, pretty much” calmed the situation. Nonetheless, with the next stage of the conflict far from clear, the prospect of prolonged disruption to energy supplies persists. High oil and gas prices pose upside risks to inflation and monetary policy and downside risks to growth. Asian economies such as Japan, Korea, India, and mainland China source over half their energy imports from the Gulf and some have already pledged fiscal support. Upward pressure on interest rates Despite the oil price easing somewhat, the hawkish repricing for the Bank of England and the European Central Bank triggered by the surge in European LNG futures has not completely reversed, and with USD having rallied, the prospects for further monetary easing by some emerging markets may have lessened too. Latam central banks are still set to see the biggest divergence ahead on policy rates. Source: Bloomberg, HSBC forecasts Source: Bloomberg. Latest data: 10 March. Note: TTF = Title Transfer Facility Tariff rollback Little more than a week before the Iran conflict began, the US Supreme Court had ruled that the Trump administration’s use of emergency powers (IEEPA) to impose tariffs on US imports was illegal. The Trump administration responded by imposing a 10% global tariff (which officials have said would be increased to 15%), benefitting some large emerging market (EM) regions, including Brazil, mainland China and Indonesia, and hitting Europe relatively harder. While the ruling is causing uncertainty over tariff refunds, future tariffs, and existing and future trade deals, the market reaction before the Iran conflict had stemmed from some negative AIrelated headlines, which had caused equity markets to undergo a rotation away from financials and software towards ‘real economy’ stocks. Source: Macrobond, Latest data: 9 March. Note: EM = emerging markets, DM = developed markets Source: Bloomberg, Latest data: 10 March Note: EM = emerging markets, DM = developed markets Robust data The conflict started at a time when the recent hard data had been quite solid. Global manufacturing and services PMIs (and particularly the US services ISM) increased in February even as the US labour market data continues to paint a mixed picture. January’s upside surprise in payrolls (+126k) was followed by a large drop in February (-92k) but jobless claims are low. Globally, inflation was little changed, although core inflation was up to 2.4% in the Eurozone in February and US core Personal Consumption Expenditures (PCE) was 3% in December. In Asia, mainland China’s Jan-Feb trade data surged and attention has been on the 15th Five-Year Plan, which targets a slightly lower range of 4.5-5.0% growth for 2026, supported by fiscal policy. Policy priorities include boosting domestic demand and stepping up the anti-involution campaign, while balancing trade. Source: Bloomberg, HSBC ⬆ Positive surprise – actual is higher than consensus, ⬇ Negative surprise – actual is lower than consensus, ➡ Actual is in line with consensus Source: LSEG Eikon, HSBC https://www.hsbc.com.my/wealth/insights/market-outlook/macro-monthly/oil-ai-and-tariff-uncertainty/
2026-03-16 07:04
Key takeaways Business surveys showed improved demand and a more stable employment outlook in early 2026… …but that, and the Chancellor’s Spring Statement, was overshadowed by events in the Middle East… …which are likely to delay inflation reaching 2.0% and create more interest rate uncertainty. Consumers remain cautious, while the Spring Statement was overshadowed Official data published for 4Q25 confirmed the weak end to last year. GDP in the last quarter of the year grew 0.1% q-o-q, while on a per capita basis it fell 0.1%, the second consecutive quarterly decline. However, the turn of the year saw improved momentum and business surveys have pointed to the start of a demand recovery. Moreover, despite a higher unemployment rate, headcount growth appears to be at least stabilising. On the other hand, input prices, including labour costs, continue to squeeze margins. Consumers have remained more cautious – GfK consumer confidence ticked down in February, while intentions to save rose against a backdrop of economic uncertainty, weaker job prospects, and squeezed household budgets. Chancellor Rachel Reeves was keen to remind voters of the measures to cut the cost of living from April 2026 in her Spring Statement. However, despite that, and a marginally better fiscal position expected by the OBR, the forecast update was not just a nonevent, but was entirely overshadowed by the conflict in the Middle East. Source: HSBC Higher energy prices could throw inflation and rates off course Although we never expected the improved momentum in the first two months of the year to persist at an ever-improving pace over 2026 – recent years have seen a short-lived post-Autumn Budget bounce-back in 1Q – our expected narrow path for greater optimism this year risks being thrown off course by the conflict in the Middle East. Underpinning our outlook for the UK was greater stability and confidence, for CPI inflation to fall to 2.0% (the Bank of England’s (BoE) target), and for interest rates to be cut to 3.00% this year. In light of the events in the Middle East, the Strait of Hormuz has been disrupted, some oil production halted, and energy prices have jumped. Although, HSBC Global Investment Research expects energy prices to moderate over the course of the year, with energy prices at current levels inflation will likely stay materially above 2% over the coming months, higher than previously expected. Importantly, the inflationary impact and subsequent interest rate response depends on any further oil and gas price spikes and how long energy prices stay elevated. Given the uncertainty and possible broader impacts on the economy, we expect the Bank of England to err on the side of caution and leave Bank Rate unchanged until 4Q26. Source: Macrobond, S&P Global, HSBC Source: Macrobond, Bloomberg, HSBC forecast Note: *Scenario based on energy impact only. Source: Macrobond, Bloomberg, https://www.hsbc.com.my/wealth/insights/market-outlook/uk-in-focus/higher-energy-prices-could-throw-inflation-and-rates-off-course/
2026-03-12 12:01
Market outlook remains promising amid shifting narratives As we enter the second quarter of this already eventful year, it’s worth reflecting on what’s changing – and what we should do next. So far, our multi-asset strategy has proven to be a winning formula for navigating the fast-changing environment, and we remain committed to it. Recent weeks and months have clearly demonstrated that the financial landscape remains highly volatile and can change dramatically with little warning. Market narratives have shifted from concerns about rising fiscal deficits and the impact of AI on software companies, to new US tariffs, the appointment of a new Federal Reserve chair and, most recently, the geopolitical conflicts in the Middle East. What does this mean for investors? While these narratives have commanded a lot of attention, we see two sides to the story. History tells us that conflicts in the Middle East tend to lead to short-term volatility but not to a long-term correction, unless a recession follows or the Fed is forced to hike interest rates. We think this is quite unlikely. As for the recent tech sell-off, which led to a sharp rotation from technology into other sectors, we view it as somewhat overstated and not entirely negative. Investors are diversifying their portfolios to reduce concentration risk, while tech valuations have also adjusted to more reasonable levels. Notably, although tech stocks have underperformed, they continue to deliver positive earnings surprises. While uncertainty lingers, we remain optimistic, as the world is still full of opportunity. The US economy remains resilient, supported by fiscal spending, investments in AI, electricity-related infrastructure and re-onshoring. Globally, the cyclical outlook is also healthy, with inflation under control and corporate margins close to record highs, particularly in the US. Earnings growth is strong across sectors in the US, while profits are accelerating most rapidly in Asia. Even Europe is benefitting from increased AI adoption. This healthy starting point should allow companies to absorb higher oil prices without major issues. A strategic path to resilient portfolio One thing is clear: the traditional focus on equities and bonds is no longer sufficient to navigate today’s market dynamics. Markets will continue to ask questions about AI, but they will also be driven higher by this rising earnings tide in sectors such as industrials, materials and utilities. The key isn’t to rely solely on technology, particularly the Magnificent 7, but to embrace a broad-based approach in public markets, complemented by income strategies to generate steady returns, as well as gold and alternative assets to enhance diversification. Geographically, we continue to favour the US, while increasingly adding to Asia, which provides stock level diversification at compelling valuations, along with exposure to dynamic growth drivers and a vibrant innovation ecosystem. Some emerging markets have also outperformed as investors look to reduce their US exposure. Consistency in uncertainty Finally, at times of rapid change, we believe it’s important not to be swayed by excessively pessimistic or exuberant narratives. As we write, the conflict in Iran is still ongoing, and markets have seen big gyrations. Staying calm and diversified, with our four investment themes positioned to capture both cyclical and structural opportunities, can help weather headline risks. In this edition, we feature a conversation on disruptive technology and its future with Cathie Wood, Founder, CEO and CIO of ARK Invest, as well as a thought leadership piece exploring strategies to optimise portfolio resilience through identifying emerging investment trends. We hope these insights and our investment themes will help you navigate the months ahead with confidence.. https://www.hsbc.com.my/wealth/insights/market-outlook/investment-outlook/market-outlook-remains-promising-amid-shifting-narratives/
2026-03-10 12:01
Key takeaways Most assets have recently been selling off together, with USD, as well as energy and IT stocks seemingly the only safe havens. Markets were working through the consequences of a risk scenario of high-for-longer oil prices, which could hit growth and boost inflation. While they did not fully price in stagflation, they are relieved at Mr Trump’s declaration that the conflict would “very soon” be over. Yet, the key will be when and how oil will flow through the Strait of Hormuz, which remains unclear and will continue to lead to volatility. While volatility strategies can provide opportunities without taking a directional view, the extreme ups and downs in recent days illustrate the danger of timing decisions and support our preference for building resilient portfolios. For the medium term, we remain of the view that the reduction in concentrated positioning and the lower valuations will help bring back investors when oil starts to pass through the Strait of Hormuz again. AI innovation, investment and oil production should continue to support the US economy. However, managing short-term volatility is clearly key, with a focus on quality and multiple diversifiers. Please refer to the full report for details about the event and our investment view. “Overweight” implies a positive tilt towards the asset class, within the context of a well-diversified, typically multi-asset portfolio. “Underweight” implies a negative tilt towards the asset class, within the context of a well-diversified, typically multi-asset portfolio. “Neutral” implies neither a particularly negative nor a positive tilt towards the asset class, within the context of a well-diversified, typically multi-asset portfolio. https://www.hsbc.com.my/wealth/insights/market-outlook/special-coverage/stagflation-fears-fall-on-hopes-that-conflict-will-end-but-uncertainty-remains/
2026-03-09 12:01
Key takeaways Geopolitical uncertainty is driving divergence across traditional “safe havens”. USD strength persists, but JPY lags while SNB signals it will act to cap CHF strength. In Asia, RMB stability stands out versus regional peers. Given ongoing tensions in the Middle East, the USD’s resilience is unsurprising. In our view, a further rise in oil prices, alongside higher cross-asset volatility, is likely to provide additional support to the USD. Within the traditional “safe haven” complex (Chart 1), the JPY has not yet benefited from heightened geopolitical risk. Meanwhile, the Swiss National Bank’s (SNB) increased readiness to intervene against CHF strength suggests a floor for G10–CHF pairs. SNB Governing Board member Antoine Martin reiterated this stance, stating that “our willingness to intervene, our readiness to intervene, is higher, given the recent political event” (Bloomberg, 4 March). Note: Data as of 5 March 2026 at 20:00 HKT Source: Bloomberg, HSBC Source: Bloomberg, HSBC Among Asian currencies, the RMB has remained relatively stable, down only c0.7% month-to-date vs the USD, outperforming most regional peers (Bloomberg, 5 March). China’s latest government work report has outlined its FX policy priorities for 2026, reaffirming the longstanding objective of maintaining the RMB exchange rate at stable and reasonable levels. Notably, this year’s report places greater emphasis on expanding the use of RMB in cross-border transactions, which is in line with President Xi Jinping’s call for the RMB to become a global reserve currency (FT, 1 February). These priorities, alongside boosting domestic demand, pursuing more balanced trade growth, and upgrading technology, align with the People’s Bank of China’s policy towards gradual diversification away from the USD, reflected in lower USD-CNY fixing rates despite the broader USD rebound (Chart 2). While geopolitics and positioning may drive near-term USD-RMB volatility, steadily lower fixing rates and consistent domestic messaging should help anchor expectations, supporting RMB outperformance vs regional peers even if the USD strengthens further. https://www.hsbc.com.my/wealth/insights/fx-insights/fx-viewpoint/safe-havens-and-rmb-amid-geopolitical-uncertainty/
2026-03-09 12:01
Key takeaways The National People’s Congress has laid out a pragmatic and supportive economic agenda for 2026, anchored by a GDP growth target of 4.5%-5.0% and sustained policy accommodation. The strategic focus is on boosting domestic demand through consumption subsidies, service sector support, structural fiscal reforms and doubling down on technology. The escalating Middle East conflict introduces a tangible external risk, primarily through potential disruption to energy and petrochemical supply chains. As the region is a critical supplier of industrial feedstocks, a prolonged conflict would cascade through downstream industries and accelerate sectoral consolidation. However, the inflationary pass-through to consumers is expected to remain muted. We remain overweight on Chinese equities, focusing on innovation champions and high-quality dividend stocks through our barbell approach. This allows investors to participate in China’s structural growth stories while anchoring portfolios with durable income. The offshore Chinese equity market is more sensitive to global factors, including geopolitical uncertainties. Valuations have become more attractive after the recent weakness. Please refer to the full report for details about the event and our investment view. “Overweight” implies a positive tilt towards the asset class, within the context of a well-diversified, typically multi-asset portfolio. “Underweight” implies a negative tilt towards the asset class, within the context of a well-diversified, typically multi-asset portfolio. “Neutral” implies neither a particularly negative nor a positive tilt towards the asset class, within the context of a well-diversified, typically multi-asset portfolio. https://www.hsbc.com.my/wealth/insights/market-outlook/special-coverage/china-forges-its-economic-agenda-at-npc-while-uncertainty-continues-over-the-middle-east/
