Australian shares to edge higher. Goldman forecasts US sell-off to extend into 2023. Clouds roll in on UK credit rating. $A struggles. Follow updates here.
Goldman Sachs’ equity strategist David Kostin is giving investors a reality check: the sell-off isn’t done yet.“Aside from the resurgence of TARA [There Are Reasonable Alternatives], the macro backdrop points to household selling of equities in 2023. GS Economics forecasts that GDP growth will slow from 1.6 per cent in 2022 to 0.9 per cent in 2023 and unemployment will rise from 3.6% to 4.0%.
“Historically, slowing growth and rising unemployment have coincided with household selling of equities.”“We forecast foreign investors will also be net sellers of $US100 billion of stocks in 2023. The trade-weighted dollar has appreciated 11 per cent this year, aided by its safe haven status and aggressive Fed hiking.
“Despite a stronger dollar making the US stock market more expensive in foreign currency terms, capital poured into US stocks from overseas in 2Q. We expect that comparatively high valuations for US stocks and slowing US GDP growth will drive net selling from foreign investors in 2023.”
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