Goldman Sachs upgrades commodities to neutral as it cuts outlook for equities
Uber bear Goldman Sachs is feeling slightly better about commodities, but the brighter outlook didn't extend to equities.
The investment bank upgraded commodities to neutral on a three-month basis, saying supply disruptions should support oil prices. At the same time, growth and valuation concerns led it to downgrade equities to neutral over a 12-month horizon.
Read more: Commodity prices – low point for investors? Wait until 2017
Outages across the world have helped lift oil prices from below $28 per barrel in January to near $50 today. Major industrial metals such as copper and aluminium, alongside precious metals like gold and silver, have also rallied recently.
"Until we see sustained signals of growth recovery, we do not feel comfortable taking equity risk, particularly as valuations are near peak levels," Goldman analysts wrote in a note.
"Our equity strategists have become more defensive, owing to heightened drawdown risk and growth scarcity," they added.
It stayed "overweight" on credit over both three and 12-month time periods, while remaining "underweight" on bonds.
Read more: Low oil prices aren't a death knell for the economy
Goldman Sachs has previously said embattled metal markets, which respond more slowly to supply side adjustments, will take longer to recover than the equally stricken oil sector.
"While metal prices are expected to be supported over the next one to two months … we forecast that near-term metals support will prove to be fleeting on a one to two year view, both on an outright basis, and relative to oil," Goldman said at the time.