2026-03-05 12:01

Key takeaways Markets remain volatile and sentiment is fragile, but there are some tentative signs of stabilisation and bottom fishing too. US markets have remained relatively resilient and European stock markets had a positive day on Wednesday. Asia is rebounding after yesterday’s sell-off, which seems linked to deleveraging rather than new fundamental concerns. Our analysis of current global stability and liquidity risks does not throw up major concerns. And our historical analysis of past oil price spikes suggests that a lasting equity market correction is unlikely, because neither a US recession nor Fed rate hikes are on the cards. Unless our assessment on these two risk factors changes, we would view any volatility as a longer-term opportunity, especially as it follows the recent sell-off in AI. That said, building resilience to weather the short-term news flow is key. Before the conflict started, our concern was that excess oil supply would cap prices and margins, but the conflict has increased risks to supply and transit through the Strait of Hormuz. Even if markets stabilise, oil stocks are a good hedge against higher oil prices. We, therefore, decided to upgrade global energy stocks from underweight to neutral. 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/sell-off-eases-as-markets-remain-orderly-and-investors-aim-for-resilience/

2026-03-03 12:01

Key takeaways Geopolitical events can give confusing signals for currencies, beyond the USD. Tensions in the Middle East may bolster the USD over the near term, especially if oil prices and market volatility increase. But easing tensions could prompt USD weakness, given unchanged underlying fundamentals. The conflict in the Middle East is likely to support the USD over the near term, marking a departure from its performance last June when heightened tensions between the US, Iran, and Israel led to only a brief period of USD strength. At that time, ongoing US policy uncertainty quickly eroded the currency’s gains, prompting debate over the USD’s status as a “safe haven” asset. In our assessment, such discussions could be misleading, as geopolitical events often generate mixed signals for currencies, and the impact on the USD is highly dependent on the broader context of uncertainty. Recent market positioning data indicates that speculative investors are significantly short on the USD, with the latest Commodity Futures Trading Commission (CFTC) figures showing some of the most extreme net short USD positions in recent years. Should oil prices rise sharply and cross-asset volatility increase, the USD could benefit, particularly if there is widespread risk reduction in financial markets. These conditions are typically required for the USD’s “safe haven” characteristics to become more pronounced. Ultimately, oil price movements will play a critical role in determining currency direction. The Strait of Hormuz, which handles approximately 19% of global oil shipments, represents a key point of sensitivity. Any disruption could have a substantial impact on FX markets, especially for major net oil importers (see the chart below). Conversely, a de-escalation of geopolitical tensions would likely see the USD relinquish recent gains, as the underlying factors supporting a softer USD outlook remain unchanged. Source: Bloomberg, HSBC https://www.hsbc.com.my/wealth/insights/fx-insights/fx-viewpoint/usd-middle-east-conflict/

2026-03-03 07:03

Key takeaways Since the US Supreme Court struck down the IEEPA tariffs, FX movements have been fairly muted. Negative market sentiment appears less pronounced compared to last year. We expect the USD to drift lower and the EUR to edge higher in the weeks ahead. Since the US Supreme Court ruled against the Trump administration’s use of the International Emergency Economic Powers Act (IEEPA) for tariffs on 20 February, USD volatility has remained fairly muted (Chart 1). This was widely expected, given earlier signs of judicial scepticism. However, US policy uncertainty persists, especially with President Trump’s recent global tariff announcements, which could weigh on the USD and trigger market moves if major trade developments occur. That being said, the negative sentiment may not be as strong as it was after “Liberation Day” last year. US President Trump’s State of the Union (SOTU) address on 24 February, while lengthy (a record 1 hour and 47 minutes), introduced few new policy measures. He called the Supreme Court’s decision “unfortunate” and “disappointing”, yet claimed it gives him more power to impose tariffs (Bloomberg, 24 February). Despite these uncertainties, we are not expecting a sharp decline in the USD over the near term. Heightened geopolitical risks could, in fact, support the USD through the unwinding of short positions. The Federal Reserve (Fed) is unlikely to cut rates at its March or April meetings, a view shared by both markets and our economists, though unexpected economic data could influence future policy. Source: Bloomberg, HSBC Source: Bloomberg, HSBC EUR-USD has held steady despite ongoing EU-US trade uncertainty. The EU is likely to postpone ratification of the trade agreement as legislators seek further clarity on US trade policy (Bloomberg, 24 February). With EUR-USD trading above interest rate differentials (Chart 2), most US policy risk seems priced in. Over the near term, we expect EUR-USD to move towards the upper end of its current range, though significant new highs are unlikely. In the Eurozone, fiscal expansion and production recovery offer some upside, but a strong EUR rally would require robust wage growth or a clear credit cycle. The European Central Bank’s (ECB) influence remains limited, with no rate changes expected in 2026 (Bloomberg, 24 February). https://www.hsbc.com.my/wealth/insights/fx-insights/fx-viewpoint/usd-tariff-uncertainty-resurfaces/

2026-03-03 07:03

Key takeaways The recent market sell-off was triggered by concerns that incumbent software companies could be replaced by AI start-ups. We believe these fears are exaggerated, as these companies are also well positioned to benefit from AI for greater efficiency. The investor rotation from IT to other sectors broadens opportunities in industrials, materials and utilities. A multi-asset solution will help diversify across asset classes, sectors, markets and currencies. While the US Supreme Court limited the use of IEEPA, the administration quickly responded with a 15% global tariff using Section 122. Import-reliant sectors may benefit from lower near-term cost pressures and reduced legal uncertainty. Overall, resilient US growth, solid earnings and continued AI momentum support our bullish view on US equities, while total tariff revenue is expected to remain stable in 2026, which is also positive for bonds. We favour US investment grade credit over high yield. We assess the potential market impact under different scenarios in the Middle East. Continued strikes across several countries would increase oil and gold prices, while putting pressure on European economies, emerging-market oil importers and cyclical sectors. Conversely, these market segments would benefit if tensions ease. Although gold prices may decline in this scenario, gold is expected to remain a key diversifier. Solid earnings growth across sectors and regions supports our market optimism. Outside the US, Asia sees the most positive earnings revisions. https://www.hsbc.com.my/wealth/insights/asset-class-views/investment-monthly/positive-outlook-remains-amid-tech-sell-off-and-new-tariffs/

2026-03-02 12:01

Key takeaways The PBoC will remove the 20% reserve on USD-CNY forward contracts, starting from 2 March… …this change is intended to moderate, not reverse, RMB appreciation, in our view. The RMB is likely to strengthen further against the USD, while the PBoC could relax more measures. On 27 February, the People’s Bank of China (PBoC) announced that it would reduce the risk reserve requirement for onshore USD-CNY forward contracts from 20% to 0% from 2 March. This measure, which was reinstated on 28 September 2022 to curb RMB depreciation expectations as USD-CNY surpassed 7.00, has now been unwound. We view this adjustment not as an attempt to halt or reverse RMB appreciation, but rather to moderate its pace. Since the Lunar New Year holiday, USD-CNY fixing rates have reached new multi-year lows, and the RMB has strengthened notably against the USD. The China Foreign Exchange Trade System (CFETS) RMB Index also rose further, indicating the RMB has been strengthening against a basket of currencies. Meanwhile, the spread between the fixing and the spot rates has widened (see the chart below). Recent cross-border flows indicate that onshore corporates and investors have been selling USD at a record pace, resulting in unprecedented net short USD-CNY forward positions. In this context, the PBoC’s decision to remove the risk reserve requirement appears justified. Source: Bloomberg, HSBC Our outlook remains that USD-RMB could decline further as we approach key events. The National People’s Congress on 5 March is likely to focus on domestic priorities, such as industrial upgrading, technological self-reliance, growth rebalancing, and RMB internationalisation − all supportive of a stronger currency. Additionally, US President Trump’s scheduled visit to China from 31 March to 2 April signals ongoing stability in trade relations between the two countries. Looking ahead, the PBoC may continue to relax some of the previous policy measures. Historically, the removal of the risk reserve in October 2020 was followed by further adjustments, including changes to macro-prudential assessment (MPA) parameters in late 2020 and early 2021, as well as two reserve requirement ratio hikes on FX deposits in 2021. However, these actions did not reverse the RMB’s appreciation trend against the USD at that time. https://www.hsbc.com.my/wealth/insights/fx-insights/fx-viewpoint/rmb-managing-the-tempo/

2026-02-25 12:01

Key takeaways Table of tactical views where a currency pair is referenced (e.g. USD/JPY):An up (⬆) / down (⬇) / sideways (➡) arrow indicates that the first currency quotedin the pair is expected by HSBC Global Research to appreciate/depreciate/track sideways against the second currency quoted over the coming weeks. For example, an up arrow against EUR/USD means that the EUR is expected to appreciate against the USD over the coming weeks. The arrows under the “current” represent our current views, while those under “previous” represent our views in the last month’s report. https://www.hsbc.com.my/wealth/insights/fx-insights/fx-trends/g10-currencies-us-tariff-ruling/