Equities: AI-led upside and income focus – HSBC

HSBC's Willem Sels points out accelerating AI adoption, resilient growth, and expanding earnings as factors driving global equities into Q4 2026. The bank has increased its exposure to global stocks, particularly favoring the US and Asia, while maintaining a diversified sector approach. Attractive real yields in bonds, along with Gold and alternative assets, are considered key portfolio stabilizers and income sources.

The article aims to help readers understand a rapidly changing world and position their portfolios for the opportunities it presents. The team is available to help implement these themes. Heading into the final quarter of 2026, AI remains a key catalyst for market optimism, while geopolitical tensions, inflation uncertainty, and the US mid-term elections continue to pose risks and opportunities.

The article believes earnings growth will broaden beyond the tech sector and US stocks, with Asia benefiting from global chip demand and data center expansion. AI adoption is also boosting productivity around the world, including in Europe. The article has recently added exposure to global equities, favoring the US and Asia, while maintaining a broad sector allocation.

Diversification is supported by opportunities in Financials, Materials, and Energy across regions. Bonds are seen offering attractive real yields, providing income and portfolio resilience against market volatility. Non-traditional assets, such as Gold, infrastructure, and alternative assets, have proven valuable in counterbalancing market uncertainty.

Gold, in particular, has seen a rebound towards the $4,400 mark, following the Greenback's decline and steady caution ahead of key US data releases. Oil prices, while calmer than before, show a notable surge in the US diesel crack spread, reaching an intraday record above $100 per barrel.