Goldman Sachs upgrades global equities to overweight, favoring U.S. and Asia

Goldman Sachs Group (GS) has upgraded its three-month outlook on global equities to overweight from neutral, citing strong earnings prospects and improved valuations after a recent market rally stalled.

Strategists led by Christian Mueller-Glissmann said earnings growth continues to support stocks, while a pullback driven by higher oil prices and bond yields has made valuations more attractive ahead of the Q3 earnings season, according to Bloomberg.

"Earnings growth remains supportive for equities and the recent valuation de-rating has improved asymmetry into the third-quarter earnings season," Mueller-Glissmann said.

The team remains overweight on U.S. and Asian equities and underweight on European stocks. Goldman favors a barbell strategy combining global technology stocks with selective rate-sensitive, bond-proxy equities.

Higher interest rates and energy prices remain the main near-term risks, while uncertainty surrounding U.S. midterm elections could add to market volatility.

Goldman maintains an overweight stance on equities over 12 months, matching its upgraded three-month outlook. The strategists remain neutral on bonds over three months but favor them over a 12-month horizon.

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