HomeLatest NewsGoldman Sachs' Optimistic Outlook for Worldwide Stocks

Goldman Sachs’ Optimistic Outlook for Worldwide Stocks

Goldman Sachs Turns Positive on Global Equities

Goldman Sachs has shifted its stance on equity markets, moving from neutral to overweight, indicating a more positive view on the asset class. The influential investment bank believes it’s time to take a more optimistic approach to equity markets.

Global Manufacturing Recovery

The bank’s note dated Feb. 16 highlighted a more procyclical feel in the cross-asset performance, attributing it to stronger-than-expected U.S. data and signs of an impending global manufacturing recovery. This recovery typically triggers a strong ‘risk-on’ rotation across assets, especially after a recession.

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Central bank cutting cycles have historically been supportive for risky assets, but Goldman Sachs noted that the expected uplift may be less so this year due to markets already factoring in much of the rates relief.

Equity Upgrade and Credit Downgrade

While the investment bank has upgraded its stance on equities, it only expects modest equity returns. This is due to sentiment and positioning already being quite bullish, and with risk premia at lower levels.

To balance the equities upgrade, Goldman has downgraded its stance on credit to underweight from neutral, stating that the risk/reward for equities seems much more attractive. Tight spreads create a speed limit for credit and it has more negative convexity late cycle, making equity valuations appear less of a binding constraint.

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Overall, Goldman Sachs’ shift in stance reflects the changing dynamics of global markets and the need for investors to adapt to the evolving landscape.

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