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HSBC Turns Neutral on U.S. Stocks Amid Economic Concerns

HSBC strategist Max Kettner is worried about slowing growth, rising bond yields and Federal Reserve tightening.
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HSBC Bank is losing its enthusiasm for U.S. stocks.

Its chief multi-asset strategist Max Kettner has cut his rating on U.S. stocks from overweight to neutral, dropping the bullish position he held since President Joe Biden won the presidential race in November 2020.

Kettner is concerned about slowing economic growth, fiscal stimulus coming off the books, inflation, rising bond yields and Federal Reserve tightening, he wrote in a commentary cited by Bloomberg.

He sees “the more expensive U.S equity market likely remaining under pressure from rising real rates in the coming weeks.” The 10-year Treasury yield has climbed 33 basis points so far this year to 1.84%.

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Kettner lifted his rating for eurozone stocks to overweight from underweight. European markets have held up better so far in 2022 than the U.S. The Stoxx Europe 600 index has slipped 1.4% year to date, compared to a 4.5% drop for the S&P 500.

As for U.S. stocks, these aren’t good levels to sell, because investor positions are too bearish after the recent decline, he said.

Kettner views emerging markets a good spot to “hide,” particularly China. It’s in an “entirely different stage of the growth/liquidity cycle,” with its central bank easing while developed-market central banks begin tightening, he said.

U.S. stocks rebounded Thursday, as the surge in bond yields has eased and investor focus returned to strong corporate earnings reports, according to Bloomberg. Union Pacific UNP and Travelers TRVL both reported fourth-quarter profits Thursday that beat analysts’ forecasts.