Central banks keep raising interest rates to curb inflation — even at the expense of economic growth — fueling fears of a recession. Goldman Sachs said it believes the U.S. is “set for a soft recession. The bank’s chief European economist, Jari Stehn, expects Europe to experience a recession this quarter, driven by rising household energy prices and tight financial conditions. A recession is likely in the second half of 2023. to the quarter, he added: “Concerns about sticky inflation and a tight labor market have focused investors on the implications of rising rates and the risk of a recession. On Oct. 17, Goldman analysts led by John Sawtell noted that this created a “difficult structure” for the stock, he added. For Europe, Goldman strategists Peter Oppenheimer and Sharon Bell said consensus estimates of earnings per share for the Stoxx 600 “have yet to come down” and said the pair expected a 10% decline in earnings per share for the European benchmark in 2023. Margins are also at “all-time highs,” Sawtell noted, and appear vulnerable to downgrades. But there is some good news – valuations are now near their previous lows, he added, which means the bottom of the market for European equities. can show. Against this backdrop, Goldman favors a leveraged approach, covering value sectors such as banks and energy, as well as more defensively positioned sectors such as healthcare and telecoms. trading at a discount to “depressed” multiples and the broader market. Goldman’s analysts are also more bullish than consensus on these stocks, implying the potential for positive earnings revisions and a re-rating of the stock. The list includes energy firms Repsol and Eni, as well as a number of banks such as Deutsche Bank, Barclays, Lloyds and Banco Santander. Other stocks on the list include Bayer, Volvo, Ericsson and JD Sports. Goldman also highlighted several buy-rated stocks it prefers in an uncertain macro environment. His list of companies with consistently positive net operating profit after tax and above market-median returns includes ASML, Novo Nordisk, L’Oreal, Nestle and Wolters Kluwer. Goldman screened for “quality” companies with “attractive” valuations. According to the bank, these stocks have higher and expanding cash flow and return on capital invested. The list includes low-cost Ryanair, Norsk Hydro and Hannover Re. Read More Chip stocks have had a tough year – but one looks ‘really inviting’, fund manager says Should you trust this recent market rally? Is Wall Street advising its clients to hedge with government bonds ahead of a recession? BlackRock says this is an “outdated” strategy. Investors looking to add growth names to their portfolios can also check out Goldman’s list of high growth stocks. “Given the dynamics in the interest rate markets, although growth will be under pressure until the end of the year, with our economists forecasting a recession in the Eurozone and the UK from 4Q22, we are approaching a slower growth environment. Against this backdrop, we highlight companies that have made it. Inflation to provide high-level growth as well as margin support given its background,” Sawtell said. Shares include payments firms Adyen and Wise, French defense equipment maker Safran and ASM International. The bank also has attractive valuations including Watches of Switzerland and Standard Chartered identified high-growth names trading with. On a separate note, Goldman also highlighted several Asian fund ideas for a more challenging macro backdrop in Asia. Goldman’s strategists, led by Alvin So, wrote on Oct. 12: “Cultures, growth and The dollar’s three main macro headwinds strengthened and pressured equity performance q shows.” With fears of a recession rising in advanced market economies (Europe and the US), we favor domestic exposure as our economists see Asia, particularly India and ASEAN, with less exposure to global economies, with relatively high growth thanks to the post-Covid recovery. they expect to do. since 2Q,” he said. The bank’s basket of local cyclicals includes some of China’s biggest tech names, such as Tencent, Alibaba, Meituan and JD.com. Nio, Li Auto and Chinese battery maker Contemporary Amperex Technology are linked to a number of electric vehicles, including stocks also turned into a basket. Goldman also screened companies with more than 90% internal sales risk and growing earnings per share more than 5% through 2023. On display are liquor makers Wuliangye and Kweichow Moutai, Indian carmaker Mahindra & Mahindra, India conglomerate ITC and Unilever appeared.Indonesia.