Goldman Sachs Flags Equity Risk as Oil Prices Surge
Get SkimNews daily
A curated daily digest across 7 categories: geopolitics, tech, finance, health, energy, sports, culture. Free.
- Goldman Sachs equity strategists led by Peter Oppenheimer warned that global equity markets face rising correction risks as soaring oil prices worsen growth and inflation outlook, with valuations near historical highs.
- US market trades at a forward price‑to‑earnings multiple of 21.1, the UK market at 14.1, and Europe at 18.3, all at elevated percentiles of their historical ranges.
- Goldman Sachs commodity analysts extended the assumed duration of reduced oil flows through the Strait of Hormuz to 21 days from 10, and project Brent averaging $98 in March‑April before falling to $71 by Q4 2026.
- Goldman Sachs economists lowered the US GDP growth forecast by 0.3 percentage points to 2.2% and raised the US recession probability to 25% from 20%.
- Goldman Sachs pushed back its forecast for the first Federal Reserve rate cut to September from June, with a second cut expected in December.
- Goldman Sachs asset allocation team downgraded equities to neutral and raised cash to overweight over a three‑month horizon, while retaining an overweight stance over 12 months.
- Goldman Sachs stopped short of forecasting a bear market, citing resilient earnings, strong corporate balance sheets, elevated household savings, and the historically short‑lived nature of geopolitical shocks.
Why it matters: Investors face higher correction risk as valuations sit near historic peaks and oil‑price shock lengthens, while Goldman’s shift to cash‑over‑equities and delayed Fed‑cut timeline could pressure equity allocations, boost demand for cash, and raise the stakes for firms with weak balance sheets.
