Top of main content

Investment Monthly: US earnings momentum continues as Trump 2.0 begins

7 February 2025

Willem Sels

Global Chief Investment Officer, HSBC Global Private Banking and Wealth

Lucia Ku

Global Head of Wealth Insights, HSBC Wealth and Personal Banking

Key takeaways

  • The Trump administration’s pro-growth, pro-innovation policies are positive for US equities but may create interest rate and inflation uncertainties. As concerns over a growing deficit have driven real US Treasury yields to attractive levels, we extend our US Treasury and global investment grade duration to 7-10 years. A multi-asset solution with active management can help balance growth and resilience. Gold is also a diversifier to mitigate geopolitical and policy risks.
  • US big banks led Q4 earnings results to the upside. Higher equity valuations are justified by higher RoE, liquidity, and the tech and AI-driven sector composition. We continue to favour US Technology, Communications, Financials, Industrials and Healthcare, which are supported by structural trends and policy tailwinds.
  • Higher US tariffs will pose additional challenges for the Eurozone while the UK Chancellor is under pressure to cut spending amid higher gilt yields and a growing deficit, leading to our downgrade of UK stocks to neutral and an extension of gilt duration. In Asia, a strong earnings growth forecast for the healthcare sector supports an upgrade to a neutral position. We prefer Japan, India and Singapore the most in the region. China met the GDP growth target of 5% for 2024. A focus on bolstering domestic demand remains critical amid potential US trade tariffs. 

Talking Points

Each month, we discuss 3 key issues facing investors

Asset Class Views

Our latest house view on various asset classes

Sector Views

Global and regional sector views based on a 6-month horizon

Start your financial health check

Take your financial health check and that will help you to understand your needs, make and achieve your financial plan.

Wealth Management

Your goals are unique to you. We’ll help you reach them – first by assessing your situation, then by helping you put a plan in place

Related Insights
While the Fed cut rates as widely expected, they expect inflation to remain above 2% in...[7 Jan]
DeepSeek, a Chinese AI lab, surprised global markets and US stocks off-guard after they... [7 Feb]
As widely expected, the Federal Reserve kept rates unchanged at 4.25-4.50% unanimously. [7 Feb]