HSBC's Max Kettner: Earnings are driving market enthusiasm even without economic data

8/8/2025 2:47:09 PM	short term sharp up	7 days later	-0.25%	-0.38%

8/19/2025 9:14:27 PM	short term up	5 days later	+0.76%	+0.76%

Indices all coming off their second positive week in three. The Dow and the S&P with their best week since August. Joining us with his outlook this morning, HSBC chief multiasset strategist Max Kettner. Max, good to see you again. What do you think is driving some of this short-term enthusiasm?

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Max Kettner

It's really the earnings side of things because consensus expectations are quite low going into Q3, especially outside technology. Earnings growth in Q2 for the 493 stocks was much better than expected, so we might see similar upside in Q3. This is prompting a buy signal and encouraging risk-taking despite some recent wobbles.

Are you a buyer of the argument that the leaders of the month might indicate a slowing economy with sectors like regional banks and homebuilders showing underperformance?

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Max Kettner

Some underperformance is idiosyncratic. For oil, we maintain a cautious stance due to excess supply after US driving season. Regional banks have underperformed large banks since SVB’s collapse, so large banks might be a safer bet. We're not rotating entirely away from tech and AI but also buying dips in banks and rotating towards manufacturing-sensitive industries.

How are you looking at the rise in gold, which is up over 3% despite a strong stock market? You recommend gold alongside tech stocks. How do you justify that?

Host

Max Kettner

Gold's drivers are different from equities. Central banks are stockpiling gold and diversifying reserves. While the debasement trade narrative doesn’t fully hold given the rising dollar and falling yields, in a world of 'nominal asset price inflation on steroids,' gold serves as the textbook hedge against nominal asset inflation.

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