Goldman Sachs Strategists Say Bear Market Will Last into 2023

(Bloomberg) — Equity investors hoping for a better 2023 will be disappointed, according to Goldman Sachs Group Inc. strategists, who say the bear market isn’t over yet. .

Most read from ​Bloomberg

Strategists including Peter Oppenheimer and Sharon Bell wrote in a note on Monday: “Conditions that are generally consistent with the lowest equity levels have yet to be achieved.” They say peak interest rates and lower valuations that reflect a recession are needed before any sustained rally in the stock market can occur.

Strategists estimate the S&P 500 will end 2023 at 4,000 points – just 0.9% above Friday’s close – while Europe’s benchmark Stoxx Europe 600 will end the year. to about 4% higher at 450 points. Barclays Plc strategists led by Emmanuel Cau have similar goals for the European measure and say the road to getting there will be “difficult”.

The comments come after a recent rally – fueled by softer US inflation data and news of an easing of Covid-19 restrictions in China – prompted some Global numbers enter technical bull market levels. The strong recovery since mid-October after a tumultuous year for global markets as central banks embarked on aggressive rate hikes to tame soaring inflation, raised concerns about economic depression.

The gains aren’t sustainable, Goldman strategists say, because stocks typically don’t recover from bottoms until the pace of decline in economic growth and earnings slows. “The short-term path for the stock market is likely to be volatile and bearish,” they said.

This view echoes that of Morgan Stanley’s Michael Wilson, who reiterated today that US stocks will end 2023 virtually unchanged from current levels and will have a bumpy road to that. that, including the big drop in the first quarter.

According to his note on Monday, Wilson’s clients opposed his view of the S&P 500 falling to as low as 3,000 points in the first three months of next year – a 24% drop from its close. Friday door. “What has not been priced in is earnings risk and that is what will ultimately act as a catalyst for the market to make new lows,” he said.

Meanwhile, Goldman strategists expect Asian stocks to outperform next year, with the MSCI Asia-Pacific (excluding Japan) index ending the year 11% higher at 550 points. . Their colleagues at Citigroup Inc. was more bullish on Chinese stocks today, saying Beijing’s pivot to Covid Zero and real estate would lift earnings.

With the bear market still going strong so far, Oppenheimer and his team recommend focusing on quality companies with strong balance sheets and stable margins, as well such as companies with high-value energy and resources stocks where valuation risk is limited.

(Updated with Barclays and Morgan Stanley strategists.)

Most read from ​Bloomberg Businessweek

© 2022 Bloomberg LP


News7F: Update the world's latest breaking news online of the day, breaking news, politics, society today, international mainstream news .Updated news 24/7: Entertainment, the World everyday world. Hot news, images, video clips that are updated quickly and reliably

Related Articles

Back to top button