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/
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/
