HSBC Private Bank is holding its bullish Q4 2026 call on US and Japanese equities, even as the S&P 500 and Nikkei 225 weekly charts show both rallies losing a step. Neither trend has broken, but each is testing a shallower leg than the ones before it.
HSBC keeps its Q4 overweight
HSBC Private Bank's Q4 2026 outlook favours the US, Japan and North Asia, alongside financials, industrials and commodity sectors, arguing that broadening earnings, not stretched multiples, should keep driving markets higher. The bank also says the gap between US and UK or eurozone price-to-earnings multiples has narrowed to its smallest since 2020, pointing to limited near-term valuation risk. HSBC's Q4 view rests on that broadening-earnings framing, and the weekly S&P 500 and Nikkei 225 charts are broadly consistent with it, though the two indices are not telling identical stories right now.
S&P 500 tests a shrinking rally leg
The S&P 500's advance since the 2025 low has come in a series of consolidation shelves followed by breakouts, moving through around 6,100, then 6,900-7,000, then 7,500. But the latest leg, from that 7,500 shelf to a recent high near 7,800, was noticeably smaller than the two before it, and price has since pulled back into the 7,570-7,650 area. A hold there would keep the stair-step pattern going; a clean break of the 7,570 shelf on a closing basis would be the first real dent in that structure since the rally resumed in April.
Nikkei 225 compresses into range
Japan's Nikkei 225 shows a similar pattern: its multi-year advance off the 2025 low remains structurally intact, with price still above the trendline that has held since the low near 51,000 in March 2026. Yet weekly highs have stepped lower, from a late-June peak near 73,600, through an August high around 69,600, to current levels near 63,700. That mix of a rising support line and falling highs is producing a converging range rather than a top; a decisive close outside the 59,000-66,000 zone would signal the next direction.
The risk to HSBC's view
HSBC's main caveat is geopolitical: a prolonged or broader conflict that produces a sustained energy and inflation shock remains the key downside risk to its outlook. Absent that, the bank says the earnings backdrop should keep pushing equities higher into year-end.
Sources: InvestingLive, InvestingLive
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