The Strategist

Goldman Sachs warns of possible drop in US stock market

02/24/2022 - 08:14

Analysts at investment firm Goldman Sachs predicted a 6% drop in the US stock market and the S&P 500 index from their levels at the end of trade on February 18. Japanese and European corporations' assets will be hit the worst, says Bloomberg news agency.

Goldman Sachs strategists based their calculations on the sensitivity of global assets to the ruble. They calculated that a 10% depreciation of the ruble would result in a 13% increase in oil prices in the worst-case scenario. Furthermore, in the most pessimistic scenario, European and Japanese stocks would lose roughly 9%, and the euro would lose 2% against the dollar.

Traders were actively selling equities and buying bonds in an attempt to mitigate risks as tensions in Donbass grew. "Tensions between Russia and Ukraine primarily hurt local assets in January, but their impacts began to undermine global markets in February," Goldman Sachs analysts noted. They pointed out that if there was an open military conflict, economic risks would rise.

The ruble would appreciate, US stocks would climb by around 6%, and bond yields would rise if tensions were to de-escalate, according to the bank's strategists.