“A strong recovery in earnings growth (global earnings sentiment is now positive) coupled with a lower cost of equity should drive high single digit returns for global equities over a 12-month horizon,” Golman Sachs analysts wrote in a note issued late on Thursday.
The Wall Street bank cut credit to “neutral”, citing its outperformance during the recent “risk-off” period and tighter spreads, which it said could become a “speed limit” on returns.
On the tech-led Nasdaq correction, the slump “has primarily been a reversal of the summer rally of U.S. Tech stocks,” Goldman added.
