Goldman Sachs is warning that the global equity bear market is not over as the markets are yet to see a trough in the momentum of global growth deterioration, a peak in interest rates and valuations lowered to reflect a likely recession.
The Wall Street investment bank said Monday it expects returns to be a “relatively low” 6 per cent through the end of 2023 as investors focus on the pace of monetary policy tightening and the consequent hit to growth and earnings.
“We continue to think that the near-term path for equity markets is likely to be volatile and down before reaching a final trough in 2023,” Goldman Sachs said in a note.
It expects the S&P 500 index to be around the 4,000-points level towards the end of 2023, implying an increase of less than 1 per cent from current levels, as it sees no earning growth.
Goldman expects earnings for the constituents in the Pan-European STOXX 600 index to slide 8 per cent next year, while forecasting a 3 per cent earnings growth for companies in Japan’s TOPIX and MSCI’s Asia-Pacific ex-Japan indexes.
The investment bank expects investors to start to price in expectations for a bull market next year.
“We expect markets to transition into a ‘Hope’ phase of the next bull market at some point in 2023, but from a lower level.”
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Compiled by Globe Investor Staff