Goldman Sachs warned on Monday that the global equity bear market is not over as markets have yet to see a slowdown in the pace of global growth deterioration, interest rate peaks and valuation cuts to reflect a likely recession. The Wall Street investment bank expects yields to be a “relatively low” 6% through the end of 2023 as investors focus on the pace of monetary tightening and the resulting hit to growth and earnings.
“We continue to think that the near-term performance of equity markets is likely to be volatile and bearish before reaching a final bottom in 2023,” Goldman Sachs said in a note. It expects the S&P 500 to be around the 4,000 level at the end of 2023, up less than 1% from current levels, as it sees no earnings growth. Goldman expects earnings of constituents in the pan-European STOXX 600 index to fall 8% next year, while it expects earnings growth of 3% for companies in Japan’s TOPIX and MSCI’s Asia-Pacific ex-Japan indexes. Investiční banka expects investors to start valuing expectations of a bull market next year. “We expect markets to move into the ‘Hope’ phase of the next bull market sometime in 2023, but from a lower level.”
