© Reuters.
Investing.com – Goldman Sachs (NYSE: ) says equity investors hoping for a better year in 2023 will be disappointed, strategists at Goldman Sachs Group Inc. ،
The strategists of Goldman Sachs Group Inc added that those who say that the bear market phase is not over yet are completely wrong, adding that the stocks should experience more violent fluctuations and declines.
Strategists including Peter Oppenheimer and Sharon Bell wrote in a note Monday that conditions that typically correspond to the lower end of a bear market have yet to be achieved.
They said higher interest rates and lower valuations reflecting the recession were needed before a sustained stock market recovery could occur.
Forecast indicator
Analysts estimate it will finish 2023 at 4,000 points, just 0.9% higher than Friday’s close.
While the Stoxx Europe 600 will close next year up about 4% at 450 points, according to strategists at Goldman Sachs Group Inc.
While the strategists of Barclays Plc led by Emmanuel Cao have the same goal for the European scale and have said that the way to get there will be “difficult”.
temporary gain
The comments come after a recent rally – spurred by weak inflation data in the US and news of the easing of Covid restrictions in China – that saw several global indices enter technical bull market levels.
The sharp recovery since mid-October follows a turbulent year for global markets as central banks embarked on massive interest rate hikes to tame spiraling inflation, stoking fears of a recession.
Goldman Sachs strategists said the gains aren’t sustainable, because stocks usually don’t recover from lows until the economy’s rate of decline and earnings growth slow.
“The short-term path of equity markets is likely to be volatile and to the downside,” they said, according to Goldman Sachs strategists.
hard trip
That view mirrors that of Morgan Stanley’s Michael Wilson, who reiterated today that US equities will end 2023 virtually unchanged from their current level, and it will be a bumpy ride to get there, including a steep decline in the first quarter.
According to his note on Monday, Wilson recanted his view that the S&P 500 was down as much as 3,000 points in the first three months of next year, a 24% drop from Friday’s close.
“What hasn’t been evaluated yet is profit risk and that is what will ultimately act as a catalyst for the market to reach new lower price levels,” he said.
The supremacy of Asia
Meanwhile, Goldman Sachs strategists expect Asian stocks to outperform next year.
Goldman Sachs strategists said the MSCI Asia Pacific and Japan index finished the year up 11%, to 550 points.
With the bear market still in full swing for now, Oppenheimer and his team advised focusing on high-quality companies with strong balance sheets and stable margins.
Goldman Sachs experts added that companies with value and energy and resource stocks, where valuation risk is limited, should also do so.
Conversely, colleagues at Citigroup Inc. today turned bullish on Chinese equities, saying Beijing pivots on Covid Zero and real estate should pick up gains.
