HSBC strategist sees no sustained selling pressure on US stocks, bullish on cyclical sectors.

HSBC strategists believe that the rotation and unwinding of popular trades last week are unlikely to trigger a larger sell-off in the stock market. They point out that weakening U.S. labor market data may drive expectations for further fiscal stimulus measures. The team led by Max Kettner noted that the sharp volatility observed last week was mainly internal rotation within the stock market, rather than widespread flight to safety selling. They also mentioned that Oracle's $25 billion bond issuance received a record high level of subscriptions, which should help alleviate some concerns about financing for artificial intelligence. Further weakening of U.S. labor market data should increase market expectations for more fiscal stimulus measures. They recommend buying on dips and tactically tilting towards early-cycle sectors to capture opportunities for improving growth momentum.