Investors hoping for big returns from financial markets this year are going to have to dial back their expectations, according to the chief global equity strategist at Goldman Sachs.
A stock market rebound at the beginning of 2019 comes after a period of gloomy market sentiment in the final three months of last year.
“European stock markets have enjoyed a rally over the course of this year to date just as most others have as well. But, fundamentally — that said — we do think profit growth is going to be pretty weak this year,” Goldman Sachs’ Peter Oppenheimer told CNBC on Friday.
“It’s worth noting that we expect pretty weak profit growth across all major regions this year… That’s where we get this idea of a sort of skinny and flat market, relatively low returns in a reasonably narrow trading range,” he added.
At the start of the year, economists at Goldman Sachs argued financial markets had overpriced the risk of a global recession.
As a result, valuations had fallen too far, Oppenheimer said.
The U.S. investment bank also predicted that as inflation risks started to moderate over the first few weeks of 2019, market participants would have needed to make sure they were already invested in equities to avoid missing out on potential returns.
When asked whether investors had seen most, if not all, of their stock market gains already this year, Oppenheimer replied: “Largely, I think,