Equity market analysts at HSBC are losing faith in the value proposition in US stock markets after a chaotic start to Trump’s second term.
“Prior to the US elections, we assumed that a Trump victory would reinforce US exceptionalism,” HSBC writes. “Today, we are upgrading Europe (ex UK) to overweight (from underweight) and downgrading the US to neutral…”
“What we underestimated was how the US’s wavering support for NATO and Ukraine would trigger a watershed moment for the eurozone – with Germany expected to also follow through with sizeable fiscal stimulus. It is important to stress that we are not turning negative on US equities – but tactically, we see better opportunities elsewhere for now.”
It’s notable that there are some concerns on whether German will actually be able to agree and implement some of those reforms, it won’t be an easy process.
In any case, it wasn’t an easy day anywhere today as the DAX fell 1.75% in the second day of declines following a record high last week. HSBC late to the game?