Goldman Sachs on Monday revised its short-term stance on global equities, moving its three-month view from "neutral" to "overweight." The bank said earnings growth remains a constructive backdrop for equities and that valuations are now more compelling as markets approach third-quarter earnings season.
Macro drivers cited by Goldman
Goldman highlighted a set of recent market forces. Concerns about supply in the Middle East have put upward pressure on oil prices, contributing to inflationary forces and the prospect of rates staying higher for longer. At the same time, an accumulation of corporate and sovereign debt has coincided with a global bond selloff that unsettled markets in recent weeks.
Why Goldman sees an entry point
Despite those headwinds, the firm argued the recent market pullback provides a more attractive entry point for equities ahead of third-quarter earnings, and the adjustment brings its three-month outlook into alignment with the bank's already bullish 12-month view.
Regional and sector positioning
- Goldman said it remains "overweight" on Asia and the United States.
- It remains "underweight" on Europe.
The bank flagged higher interest rates and rising energy prices as the primary near-term risks to equity performance.
Market structure and portfolio guidance
Goldman recommended a barbell approach to positioning: holding technology stocks on one end and bond-like equities on the other. The bank argued both segments could benefit from any rate relief, while the bond-like portion would provide a hedge if technology stocks fell or growth concerns intensified.
Outlook on bonds
Separately, Goldman upgraded its 12-month view on government bonds to "overweight," stating, "We believe bonds should gradually move from portfolio headwind to hedge."
Additional market notes
The research note also cautioned that U.S. midterm election uncertainty could increase market volatility from its currently low levels.
Market moves referenced in the note
The bank's comments appeared alongside market data showing the Nasdaq 100 benchmark NDX up 0.51% and oil marker LCO up 1.82% during the snapshot referenced in the note.
This report synthesizes Goldman's stated views and market observations as presented in the firm's note; it does not add additional forecasts or outside information.