Equities: Reflationary environment likely to support buying the dip – Goldman Sachs

Analysts at Goldman Sachs recommend buying the dips for the global equities, including the S&P 500 index, in light of the stimulus measures.

Key quotes

“The market is rising on good news but choosing to largely ignore weaker data and rising infection rates.”

“There is a risk of a correction, but without a bear market inflection.’

“The sharp rebound is “almost identical” to the recovery from the trough of the financial crisis in 2009, which was followed by a correction.”

“The unprecedented speed and scale of policy support during the pandemic, designed to reduce the risk of longer-term scarring, has also reduced the risks of structural scarring and tail risks for investors, allowing them to ‘look through’ the downturn into a recovery.”

• S&P 500 Futures drop below 3,800 as markets turn cautious ahead of Biden’s inauguration