Investing.com – Global stock markets are in a favorable position heading into 2025, but according to Goldman Sachs they currently appear to be ‘perfectly priced’, increasing the scope for correction. It is said that there is
Goldman Sachs analysts said in a Jan. 9 note that the inflation and rising interest rates that raised concerns of a hard landing in 2022-2023 have long since subsided.
The bank expects positive global growth to continue beyond 2025 due to lower interest rates, a combination that, at least in the past, has produced strong stock returns.
However, despite the favorable backdrop, the stock’s positioning for 2025 is complicated by three key factors, the influential investment bank said.
“First, the speed of recent stock price increases reflects much of the good news about growth that we expect. Second, high valuations may limit future returns. Third, unusually high market concentration increases portfolio risk. Concentration is determined by region (the US is increasingly dominant), by sector (technology generates the majority of equity returns), and by equity (the five largest US stocks account for the largest share). “The index is increasing by about a quarter of the index),” Goldman said.
The stock is therefore “perfectly priced,” the bank added. The most obvious one was the US, which saw a 24% return in 2023 followed by a 23% rise in 2024.
“Stock markets are expected to make further progress over the year, primarily driven by earnings, but are increasingly vulnerable to corrections due to further rises in bond yields and disappointments in economic data and earnings growth.” Mr. Goldman added.
