Goldman Sachs has warned that equity markets could go through a stagnation in a “wide and flat” range, determined by weaker returns and increased volatility, as stated by the entity's director of asset allocation, Christian Mueller-Glissmann, on CNBC
Despite the fact that the markets have returned to the levels seen before the collapse in late March, when the pandemic spread throughout the world, Glissmann recalled that the decrease in bond yields and real returns have boosted the value of stocks, causing a flatter return for investors.
"At the same time, he still has very high uncertainty about growth prospects, both short-term and long-term. And besides that, there is growing uncertainty about inflationSo in general, that makes us, in the medium term, a little less excited about risk-adjusted returns for stocks, ”said Mueller-Glissmann.
Furthermore, the Goldman Sachs strategist has highlighted that the key driver of the markets in recent months has not been optimism about growth, but optimism about inflation. Glissmann has defined this trend as a "tactical opportunity" for investors in certain sectors.
The experts of the American entity predict a recovery for the growth actions. Glissmann has pointed out that this improvement is motivated by the prospective macroeconomic data, such as the readings of the purchasing managers index (PMI) and ISM (Institute of Supply Management), which have rebounded in recent months.
"I think there is a window here for the market to become a little bit more positive on cyclical assets", he pointed. Apart from the growth actions, the director of asset allocation of the entity has highlighted that, in recent months, lDefensive titles had also appreciated more than their value counterpartslike cars and banks.
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