Forex Flash: US/European equities look to consolidate – Goldman Sachs

According to the Economics Research Team at Goldman Sachs, “We expect global growth to improve from 3.1% in 2012 to 3.3% in 2013 and accelerate further to 4.1% by 2014. However, due to the drag from fiscal contraction we only expect the US to reach a trend-like level of growth by 4Q 13.

Some US fiscal uncertainty remains and the European sovereign situation could deteriorate again, though we see risks as smaller than last year. In terms of equities, “we remain Overweight over 12 months and expect returns to be supported by a combination of a rebound in global growth, accelerating earnings growth and declining risk premia. Over 3 months we downgrade to Neutral as we expect near-term consolidation after the strong gains.” they add.