Goldman Sachs Chief Global Equity Strategist Peter Oppenheimer expects U.S. stocks to exhibit limited potential for further significant gains due to their high valuations. Future valuation expansion is more likely for European and Chinese stocks.
Oppenheimer predicts that the U.S. stock market will see moderate growth, driven by profit increases rather than valuation expansion. Mid-cap stocks in the U.S., with their higher leverage and lower valuations, could benefit more from declining interest rates and substantial growth.
In contrast, Oppenheimer is more optimistic about the valuation expansion potential in European and Chinese markets. European stocks with considerable exposure to the Chinese market are expected to benefit from China's large-scale stimulus measures. However, German and other European stocks primarily targeting their domestic markets could face pressure due to weak internal demand unless there is significant intervention such as rate cuts or growth support.
Regarding European stocks, Oppenheimer highlights the attractiveness of UK stocks due to their low valuations, high free cash flow yields, and dividend yields. He also notes increased investor enthusiasm and stability in the UK market.
Last week, European luxury stocks surged following a series of rate cuts and stimulus policies from China’s central bank. LVMH, Kering, Dior, Hermès, and Burberry saw notable gains, with increases of over 9% in stock prices. Other brands such as Rémy Cointreau, Richemont Group, L'Oréal, Pernod Ricard, and Hugo Boss experienced stock price increases ranging from 4.78% to 7.9%.
The European personal and household goods sector, influenced by luxury giants, rose approximately 9.4% last week, second only to the basic resources sector, which climbed 10.8%. Chinese market-influenced automotive stocks also increased, with the automotive and parts sector rising around 6.1% for the week. In comparison, the best-performing sector in the S&P 500, materials, gained only about 3.4% over the same period.
