Global Stock Markets Set for the Biggest Monthly Cecline Since the Outbreak

With global stocks poised for their worst month since the pandemic began, strategists at Goldman Sachs and Citi think now is the time to get in.

“We believe any significant decline in the index should be seen as a buying opportunity,” Goldman Sachs strategists including Peter Oppenheimer wrote in a note Wednesday. Citi strategists including Robert Buckland expect the decline in growth stocks to ease as real yields stabilize.

Global equity markets are off to a rough start in 2022 amid rising bond yields, possible Fed tightening and the looming threat of war with Russia. The global MSCI ACWI index fell about 7% in January and was on track for its worst monthly performance since March 2020. The S&P 500 edged into a technical correction on Tuesday, closing more than 9% below its Jan. 3 record high.

Goldman‘s Oppenheimer said in an interview: “The key factor affecting the stock market is the expected increase in interest rates and how much the change in financial conditions will affect economic growth, which will be the key to determining how the stock market stabilizes.”

Citi’s strategists echoed that sentiment in Wednesday’s report, saying their bear market list hinted at bargain hunting. The bank is particularly bullish on markets outside the U.S., preferring defensive sectors such as consumer staples and healthcare in the U.K. and Japan.

But not everyone has become optimistic. Barclays strategists including Emmanuel Cau wrote in a note on Wednesday that mutual funds and retail investors remain “very overweight” stocks, with the potential for more de-risking if fundamentals deteriorate.