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#1 19-11-2020 09:56:28

johnedward
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From: Paris - France
Registered: 21-12-2009
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Goldman Sachs issues a bullish market forecast for 2021

Goldman Sachs issues a bullish market forecast for 2021


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With just over 4 weeks to go before the year-end holidays, investment companies around the world are already revealing their forecasts for next year for the main asset classes. Needless to say, the positive news about vaccines from Pfizer, Moderna and probably others in the near future have changed the outlook for the virus situation.

With the pandemic, the outlook for economic growth has also changed. Add to this the new US President, the new easing measures taken by the major central banks, the new fiscal stimulus packages and the massive infrastructure investments in the US, and the picture can only be positive.

However, as ECB Director Lagarde is quick to point out, news about vaccines is already factored into the forecast. Therefore, with a vaccine on the table, economic recovery will still have difficulty returning to pre-virus levels.

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Goldman Sachs forecast for 2021

The American investment bank has published its forecasts for the equity markets for the next year. As we are already in the latter part of November, we can easily interpret it as a forecast for equities for next year.

The first thing that strikes us is that Goldman considers the S&P 500 to be the best performing stock market index next year. It performs almost twice as well as the STOXX Europe 600 and more than twice as well as the TOPIX. This is more than interesting because European equities have long underperformed their American counterparts. One would have thought that a rotation from the US to emerging markets (MSCI Asia-Pacific) would make sense, let alone the STOXX Europe 600.

At the time of Pfizer's announcement last week, the European banking sector had made the most progress. It recorded double-digit growth in just a few days, surpassing the S&P 500 jump. However, it turned out to be an exogenous event.

Goldman Sachs is right to put more emphasis, once again, on the US stock markets. The Fed is expected to offer more easing next month. In addition, a huge infrastructure bill of more than a trillion dollars is underway with the new administration. In addition, while corporate taxes will rise, tensions on trading should ease, making it easier for U.S. companies to access foreign markets.

Overall, U.S. equities are once again in a win-win situation. Why is this? The situation is similar to the one that prevailed before the U.S. elections: no matter who was going to win, stocks were about to rise.

And that's what they did.

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