Where to invest in 2021: forecasts on markets and indices

Goldman Sachs forecast indicate decisive rallies for Wall Street: here are the new targets for S&P 500 and EU stocks between now and 2022, analysis and advice on where to invest in 2021.

where to invest in 2021

Goldman Sachs forecasts on the Wall Street indices suggest that there will be new all-time highs by the end of the year: in fact, analysts have revised upwards the end-of-year target on the S&P 500, also thanks to the powerful rally after the US elections and further fueled in recent days from the news of the Pfizer vaccine. Now the US investment bank sees the S&P 500 at 3,700 points at the end of the year, which is on the new top ever and 100 points more than the previous estimate.

In the US Equity Outlook 2021 we read that “A vaccine is a more important development for the economy and markets than the future policies of a Biden presidency”, therefore Goldman Sachs gives greater importance, for the equity outlook, to the results released by Pfizer about his COVID-19 vaccine. The vaccines and new treatments that are arriving will allow the social environment to gradually normalize during 2021.

US markets ready to run also in 2021 and 2022

For this reason Goldman Sachs also revises upwards the 2021 target for the S&P 500, expected to rise by 16% to 4,300 points at the end of the year 2021 and to gain a further 7% to reach 4,600 points by the end of 2022. “The market is actually less dependent on the performance of some mega-caps than many investors perceive” states Goldman Sachs in its US Equity Outlook 2021.

The US elections also have consequences for the markets: Joe Biden was elected the 46th President of the United States, but Congress will likely remain divided (it will depend on the results of the two elections to the Senate in Georgia on January 5). “Politics is politics and uncertainty will remain high – remarks Goldman Sachs – A divided Congress means little room for major legislative changes, even if trade and regulatory policy positions are likely to be different from the Trump administration. A unified control (with both the Chamber and the Senate to the Democrats) would mean more tax spending but also higher individual and corporate tax rates”.

US stock market investment advice for 2021

Based on the 2021 outlook, Goldman Sachs recommends using the balance wheel with tactical positions in value stocks (i.e. stocks in stable sectors and with a not very high price / earning ratio) that benefit from vaccine and economic normalization, and stocks with long-term growth prospects.

Other investment advice: focus on stocks that are well positioned according to ESG investment criteria with overweight recommendation on IT, healthcare, industry and basic materials.

Goldman Sachs forecasts on European markets 2021: double-digit jump expected

Forecasts by Goldman Sachs economists point to a marked economic acceleration from the end of the first quarter when, with the distribution of the vaccine and the slowing of the pandemic, the blockages to circulation will be eased. European and global growth next year is expected to be close to 6%.

“While growth is improving, we expect political support to remain in place. The Recovery Fund money has just been spent and we expect more fiscal expansion nationwide, ”says Goldman Sachs, who also expects the ECB to take action with an additional € 300/400 billion in Emergency Program QE (PEPP).

Accelerating growth and accommodative policy: a particularly favorable combination for equities. The new estimates are therefore of STOXX Europe 600 around 430 points at the end of 2021, with a potential increase of 13% in the price and a total return of 16%. Levels still slightly below the pre-pandemic February peaks. The EPS of the EU stock index is seen to mark + 50% in 2021 and + 12% in 2022.

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