Goldman Sachs Forecasts Upside

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Goldman Sachs Forecasts Upside

Goldman Sachs Forecasts Upside In Global Equities

According to Goldman Sachs, the equity markets will turn positive in 2024. Earlier, the investment bank had given a neutral rating to the global equities, which has now changed to overweight.

The reason behind this rating upgrade is the recovery seen in global manufacturing. The late US data is also excellent, meaning global consumption will also turn up a notch.

Overweight Rating For Global Equities

If we look at history, a recovery is usually followed by a risk on sentiment in the global equities. So that's also a reason that pushed Goldman Sachs to turn positive on equities.

According to Goldman, the cutting cycles of various central banks in 2024 will also serve as a base for upside in global equities. They added that lower interest rates would benefit the USA, EU, UK, & and other stock markets.

However, the uplift in the equity market may be limited as the market players have already factored in rate cuts. Although the hopes of rate cuts were crushed a few times, the bottom line is that rate cuts are coming this year.

Although Goldman Sachs is optimistic about the equities market, they added that the returns will be modest. They cited that the markets face a fundamental challenge from the investors' sentiment and low-risk premium.

Goldman Sachs also expressed their views by saying that the risk and reward ratio for the equity market has become very attractive. The rate cuts will further improve the appeal for such assets.

While global equities stand ready to benefit from the low-interest rates, the currencies are expected to register losses.

The last few years have led to the era of hawkish central banks worldwide, which has never been seen in the previous few decades. As a result, it was natural for the global equities to get on the back foot while the FX currencies took charge.

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