Interest rates will affect profitability-Goldman Sachs
2023.01.05 13:59
Interest rates will affect profitability-Goldman Sachs
Budrigannews.com – Goldman Sachs analysts stated in a note to clients on Thursday that the trajectory of nominal and real interest rates “will be central to the returns for 2023.”
Oppenheimer’s economists expect inflation to ease this year, but “the recent easing of financial conditions could push the Fed and other central banks to higher peak rates than currently priced,” according to the note on what to watch in 2023. The analysts assert that this would result in lower valuations.
In addition, Goldman Sachs is keeping an eye on the growth rate, earnings momentum, and margins in 2023.
“For the first time since the global financial crisis, valuation played a significant role in equity markets in 2022: In general, sectors and markets with lower prices performed better. The analysts added, “We anticipate this pattern to continue at least until interest rates begin to fall and relative valuations further mean revert.”
“The hurdle rate for investing in equities has increased, despite the fact that we anticipate a market turning point this year. Bonds and cash now provide a reasonable alternative return. We continue to anticipate a market that is relatively “flat and fat.”
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