HSBC and Goldman Sachs issue global market outlooks

Major financial institutions HSBC Asset Management and Goldman Sachs have released reports detailing divergent opportunities and risks in global markets.

HSBC Asset Management suggests that current valuations and risk premiums make international and emerging markets attractive. While emerging market gains have recently been concentrated in semiconductor giants in South Korea and Taiwan, the firm encourages a broader approach. HSBC notes that while high interest rates may pressure equity valuations, they increase expected returns for cash and fixed-income assets. To manage risks from both disinflation and persistent inflation, the firm recommends diversifying into real assets, commodities, and hedge funds.

Goldman Sachs reports that while the S&P 500 remains near historical highs, market breadth is at its lowest level since the technology bubble, with most stocks trading well below their peaks. The bank forecasts earnings per share for the S&P 500 to reach $375 in 2026 and $415 in 2027. However, Goldman Sachs warns that the contribution of artificial intelligence to profit growth may decelerate, as AI investments currently account for approximately half of the S&P 500's earnings growth.