Stock investors may view the US midterm elections as a risk-clearing event, but HSBC strategists warned that due to the risks associated with artificial intelligence and the situation in the Middle East, they should be cautious in the short term and warned that “the pain is still to come.” The strategy team led by Max Kettner said that those historical comparisons, which showed that the stock market usually strengthened after the midterm elections, “are likely to mislead judgments this time.” The real risk in this round is that the market is worried about excessive investment in AI capital expenditure and another escalation of the situation in the Middle East. The strategist mentioned that if a “blue wave” occurs, concerns related to AI regulation will probably become the focus of the market. They believe that long-term assets in developed markets are a safer choice suited to various election scenarios. Kettner and her team wrote, “We're still optimistic about the basic outlook for 2027, but it's still too early to lay out the layout.” Strategically, Eurozone and US technology stocks continue to be low, and they are optimistic about the equivalent S&P 500 index and British stocks.

Stock investors may view the US midterm elections as a risk-clearing event, but HSBC strategists warned that due to the risks associated with artificial intelligence and the situation in the Middle East, they should be cautious in the short term and warned that “the pain is still to come.” The strategy team led by Max Kettner said that those historical comparisons, which showed that the stock market usually strengthened after the midterm elections, “are likely to mislead judgments this time.” The real risk in this round is that the market is worried about excessive investment in AI capital expenditure and another escalation of the situation in the Middle East. The strategist mentioned that if a “blue wave” occurs, concerns related to AI regulation will probably become the focus of the market. They believe that long-term assets in developed markets are a safer choice suited to various election scenarios. Kettner and her team wrote, “We're still optimistic about the basic outlook for 2027, but it's still too early to lay out the layout.” Strategically, Eurozone and US technology stocks continue to be low, and they are optimistic about the equivalent S&P 500 index and British stocks.