The key reasons why one bank now says U.S. stocks will outperform European equities

HSBC upgraded U.S. stocks to overweight and downgraded European equities to neutral, citing stronger S&P 500 earnings momentum as the key driver. HSBC’s strategist expects roughly 14% year‑over‑year Q1 earnings growth for the S&P 500, with an average beat versus consensus of ~12% so far; the index is up about 4% YTD versus Europe’s 3%. After a roughly 6% multiple derating to 21.2x for 2026, valuations look more attractive, supported by buybacks, positioning and resilient consumer data. HSBC favors sectors less exposed to commodity inflation — banks, insurance and tech — while warning that an oil spike above $100 and related higher energy costs could hurt profitability in airlines, logistics and household goods and weighs more heavily on Europe. Emerging markets remain overweight in the regional allocation; Japan is underweight. Overall market impact: a bullish tilt toward U.S. equities on earnings and positioning, tempered by commodity‑related risks that could pressure specific cyclical sectors and European performance.