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Investment Monthly: Market optimism on prospect of rate cuts and profit growth

26 Jun 2024

Willem Sels

Global Chief Investment Officer

HSBC Global Private Banking and Wealth

Lucia Ku

Global Head of Wealth Insights

HSBC Wealth and Personal Banking

Key takeaways

  • April’s improved US inflation data and a less hawkish Fed tone suggest that a Fed rate cut is likely in September. While the ECB should be on track to cut rates in June, we have shifted our expectation for the BoE to start in August. As the bond yield peak is likely behind us, we continue to lock in current yields from quality bonds, such as Treasuries and investment grade bonds. 
  • While strong earnings growth continues to add momentum in the US and technology, we have been broadening our geographical and sector exposure thanks to global cyclical and rate tailwinds. Amid mixed economic data, ongoing geopolitical conflicts and the upcoming US election, it’s important to stay diversified or leverage multi-asset strategies to manage market volatility.  
  • The new supportive government measures have caused the recent tactical rally in the mainland Chinese and Hong Kong SAR equity markets. However, we think it will need more time to resolve the issues in the property market and we therefore remain neutral in these markets. We continue to diversify in Asia, favouring India, South Korea and Japan. Following a surprise rate hike in Indonesia, we have shifted our allocation towards Malaysia based on improving global trade and IT activity. 

Talking Points

Each month, we discuss 3 key issues facing investors

Asset Class Views

Our latest house view on various asset classes

Sector Views

Global and regional sector views based on a 6-month horizon

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