Goldman Sachs: markets have not reached “danger zone” levels yet


LONDON (Reuters) – High valuations and one of the strongest recoveries from a bear market in history have left equities vulnerable to a correction but the recent fall is not indicative that markets have reached “danger zone” levels yet, Goldman Sachs said in a note.

“While it has not reached danger zone levels that typically precede a bear market (a fall of at least 20%), it has reached levels which have typically been consistent with corrections and relatively low returns over the next one and five years,” the U.S. investment bank said on Wednesday.

U.S. stocks fell on Tuesday, notching up losses of nearly 9% so far this month as uncertainties surrounding an increasingly hawkish Federal Reserve and rising geopolitical tensions prompted investors to dump high flying tech shares.[.N]

Goldman Sachs said markets are in a correction phase within a bull market cycle and current levels signify relatively low returns over the next one to five years.

(Reporting by Saikat Chatterjee; editing by Danilo Masoni)