World shares have endured a bruising week, and a tough 12 months to this point, however some strategists imagine the current sell-off is unlikely to pave the best way for a market capitulation.The S&P 500 closed Monday’s commerce down greater than 16% for the reason that starting of the 12 months, and nearly 12% within the second quarter alone. The pan-European Stoxx 600 was down greater than 13% on the 12 months by Tuesday afternoon, and the MSCI Asia Ex-Japan closed Tuesday’s commerce greater than 16% decrease.Traders have been fleeing danger belongings on account of a confluence of intertwining components, together with persistent excessive inflation, slowing financial progress, the conflict in Ukraine, provide shocks from China and most significantly, the prospect of rate of interest hikes from central banks seeking to rein in client value will increase.Nonetheless, strategists instructed CNBC Tuesday that there are nonetheless alternatives on the market for traders to generate returns, although they might should be extra selective.”Clearly, there’s loads of concern within the markets, there’s a big quantity of volatility. I do not assume we’re fairly at ranges of full on capitulation but, no less than by the measures that we observe. I do not assume we’re fairly into oversold territory proper now,” Fahad Kamal, chief funding officer at Kleinwort Hambros, instructed CNBC’s “Squawk Field Europe.”Kamal prompt that the combined alerts of a “fairly sturdy” financial backdrop and principally sturdy earnings — offset in opposition to fee rises and inflation issues — meant it was tough for merchants to evaluate the chance of a full blown bear market rising.Nonetheless, given the sustained and substantial rally for world shares from their pandemic-era lows over the earlier 18 months, he argued that the markets have been “overdue a correction,” and as such has retained a impartial place in shares for now.”There’s loads of causes to assume that issues aren’t as dire as the previous couple of days and this 12 months generally would counsel,” Kamal mentioned.”One in every of them clearly is that we nonetheless have a strong financial paradigm. In order for you a job, you will get it; if you wish to increase cash, you possibly can; if you wish to borrow cash, albeit at barely greater charges … you possibly can, and people charges are nonetheless traditionally low.”Kamal argued, based mostly on Kleinwort’s funding modeling, that the financial regime remains to be fairly enticing for long-term traders, with most economists not but forecasting a recession, however acknowledged that inventory valuations are nonetheless not low cost and momentum is “profoundly destructive.””Sentiment is not fairly at ranges of full on capitulation but. We’re not there but the place individuals need to stampede out of the exit it doesn’t matter what. There are nonetheless loads of smaller ‘purchase the dip’ emotions on the market, no less than in some elements of the market,” he mentioned.”We do assume that there’s loads of financial help nonetheless, and that is a motive why we’ve not reduce danger and will not be sitting fully on the sidelines, as a result of there’s sufficient there to be supported by, notably when it comes to company earnings.”Central banks have had a considerable affect on market path, with the U.S. Federal Reserve and the Financial institution of England elevating rates of interest and starting to tighten their stability sheets as inflation runs at multi-decade highs.The European Central Financial institution has but to kickstart its mountaineering cycle, however has confirmed the tip of its asset buy program within the third quarter, paving the best way for the price of borrowing to rise.Area for inventory pickingMonica Defend, head of the Amundi Institute, instructed CNBC on Tuesday that so long as actual charges – the market rate of interest adjusted for inflation – proceed to rise, danger belongings will proceed to undergo within the method they’ve to this point in 2022.”It’s not solely in regards to the quantity and dimension of hikes, however extra to do with quantitative tightening and subsequently the tightening in monetary situations and the liquidity dry-up,” she added.Like Kamal, she didn’t anticipate the mass exodus of traders from inventory markets that might be typical of a protracted bear market, suggesting as an alternative that many traders could be eager to re-enter the market as soon as volatility has moderated.”In an effort to see volatility mood, the market has to cost in absolutely the ahead steering displayed by the central banks, which isn’t but the case,” she defined.Defend added that earnings might present an “anchor” for traders, however cautioned that there’s some danger of margin compression in future earnings experiences because the hole between producer costs and client costs widens.She prompt that whereas establishing a broad “top-down” strategy to investing in fairness markets in the mean time might show tough, there is a chance for inventory pickers in high quality and worth shares, together with financials, which can profit from the rising fee atmosphere.What might go proper?Behind the turmoil in inventory markets, credit score and charges have additionally bought off in current weeks, whereas the standard safe-haven greenback has moved sharply greater, displaying the prevalence of more and more bearish sentiment in current weeks.Owing to this low start line for expectations, HSBC multi-asset strategists prompt in a be aware Tuesday that there’s scope for a pointy rally in danger belongings and developed market bonds if this modifications, with positioning and sentiment having nosedived of late.Nonetheless, HSBC stays “firmly risk-off” because the British lender’s indicators counsel a “excessive likelihood of a progress shock within the subsequent six months.””Our mixture sentiment and positioning indicator is simply above the tenth percentile. Traditionally, ranges equivalent to this have been indicative of very constructive returns for equities vs DM sovereigns or the likes of cyclical vs defensive fairness sectors,” HSBC Chief Multi-Asset Strategist Max Kettner mentioned in Tuesday’s be aware.”The difficulty nonetheless is that precise positioning nonetheless appears to be fairly elevated. For instance,our mixture positioning index throughout a pattern of real-money traders signifies that they’re nonetheless internet lengthy equities and high-yield and internet quick period.”This could point out that past a short-term reduction rally, as seen in March, the downward trajectory could be tough to reverse with out some new basic help from the economic system, he mentioned.