(CercleFinance.com) – The good start to the year signed by the world stock markets has led Goldman Sachs to turn away from bonds in favor of stocks, which the American investment bank now advises to ‘overweight’.
The New York firm started the year with a cautious positioning, displaying a ‘neutral’ opinion on both stocks and bonds, but it explains having decided to downgrade the latter to ‘underweight’.
According to Goldman, the market environment favoring cyclical assets – which is pushing stocks higher and pushing bonds lower – reflects not only the better-than-expected resilience of the US economy, but also a recovery in global manufacturing activity in the making.
However, the investment bank points out that a recovery in the manufacturing industry at the global level is generally the origin of a strong movement in risk appetite, even if this rebound generally takes place on the basis of PMI indices lower or in the wake of a recession.
Goldman Sachs adds that market sentiment is already relatively optimistic and that the upside potential of equity markets seems limited to it, but that their risk/return profile now appears more favorable than that of credit.
Certainly, stock market valuations are particularly tense in the United States, adds the American firm, which nevertheless believes that Wall Street could benefit from an upward revision of company results forecasts against a backdrop of strengthening growth.
Goldman concludes by recalling that the rate reductions of the major central banks also constitute a positive element for risky assets, while highlighting that stock prices already include a positive scenario on this point.
Copyright (c) 2024 CercleFinance.com. All rights reserved.