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/