Stocks will continue to rally over the next three months – HSBC
HSBC economists believe stocks can rise further over the next three months thanks to fiscal stimulus and strong corporate earnings. In addition, the risks associated with COVID-19 persist and investors should remain diversified.
See – S&P 500 Index: earnings upgrades to keep rising – DBS Bank
U.S. business revenues are coming back
“We believe stocks may continue to rally over the next few months, although clients should remain diversified given the risks of covid. “
The fiscal stimulus and improving corporate profits should push the market higher. At the time of writing, 38% of S&P 500 companies reported quarterly profits with more than 80% exceeding expectations. We remain overweight US, UK and Asian equities, focusing on cyclical sectors such as materials, industrials and financials. “
“Over the next 3-6 months, we have overweight European high yield bonds as we expect corporate default rates to decline and these bonds will benefit from the recovery in corporate profits. We are already overweight US investment grade, high yield bonds. “
“The prospects for a global economic recovery are strengthened by the deployment of vaccines and fiscal stimulus measures. We remain pro-risk in our investment positioning, as markets exposed to cyclical sectors may continue to perform well even if bond yields rise. Value stocks can perform well in this environment as well. “