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Investment Outlook: HSBC Perspectives Q2 2026

12 March 2026

Willem Sels

Global Chief Investment Officer, HSBC Private Bank and Premier Wealth

Market outlook remains promising amid shifting narratives

As we enter the second quarter of this already eventful year, it’s worth reflecting on what’s changing – and what we should do next. So far, our multi-asset strategy has proven to be a winning formula for navigating the fast-changing environment, and we remain committed to it.

Recent weeks and months have clearly demonstrated that the financial landscape remains highly volatile and can change dramatically with little have shifted from concerns about rising fiscal deficits and the impact of AI on software companies, to new US tariffs, the appointment of a new Federal Reserve chair and, most recently, the geopolitical conflicts in the Middle East.

What does this mean for investors?

While these narratives have commanded a lot of attention, we see two sides to the story. History tells us that conflicts in the Middle East tend to lead to short-term volatility but not to a long-term correction, unless a recession follows or the Fed is forced to hike interest rates. We think this is quite unlikely.

As for the recent tech sell-off, which led to a sharp rotation from technology into other sectors, we view it as somewhat overstated and not entirely negative. Investors are diversifying their portfolios to reduce concentration risk, while tech valuations have also adjusted to more reasonable levels. Notably, although tech stocks have underperformed, they continue to deliver positive earnings surprises.

While uncertainty lingers, we remain optimistic, as the world is still full of opportunity. The US economy remains resilient, supported by fiscal spending, investments in AI, electricity-related infrastructure and re-onshoring.

Globally, the cyclical outlook is also healthy, with inflation under control and corporate margins close to record highs, particularly in the US. Earnings growth is strong across sectors in the US, with profits are accelerating most rapidly in Asia. Even Europe is benefitting from increased AI adoption. This healthy starting point should allow companies to absorb higher oil prices without major issues.

A strategic path to resilient portfolio

One thing is clear: the traditional focus on equities and bonds is no longer sufficient to navigate today’s market dynamics.

Markets will continue to ask questions about AI, but they will also be driven higher by this rising earnings tide in sectors such as industrials, materials and utilities. The key isn’t to rely solely on technology, particularly the Magnificent 7, but to embrace a broad-based approach in public markets, complemented by income strategies to generate steady returns, as well as gold and alternative assets to enhance diversification.

Geographically, we continue to favour the US, while increasingly adding to Asia, which provides stock level diversification at compelling valuations, along nd a vibrant innovation ecosystem. Some emerging markets have also outperformed as investors look to reduce their US exposure.

Consistency in uncertainty

Finally, at times of rapid change, we believe it’s important not to be swayed by excessively pessimistic or exuberant narratives. As we write, the conflict in Iran is still ongoing, and markets have seen big gyrations. Staying calm and diversified, with our four investment themes positioned to capture both cyclical and structural opportunities, can help weather headline risks.

In this edition, we feature a conversation on disruptive technology and its future with Cathie Wood, Founder, CEO and CIO of ARK Invest, as well as a thought leadership piece exploring strategies to optimise portfolio resilience through identifying emerging investment trends.

We hope these insights and our investment themes will help you navigate the months ahead with confidence..

Investment themes

Key data to watch

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Notes
The above comments reflects a 6-month view (relatively short-term) on asset classes for a tactical asset allocation. For a full listing of HSBC’s house view on asset classes and sectors, please refer to our Investment Monthly issued at the beginning of each month.
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