Optimism among Goldman Sachs Group’s clients has surged to its highest level in approximately a year, as confidence in global growth overshadows geopolitical and macroeconomic anxieties. According to data from the bank’s trading desk, Goldman’s Risk Appetite Indicator has climbed to its highest point since early 2023, positioning it in the 96th percentile historically. Goldman Sachs is a leading global investment banking, securities and investment management firm that provides a wide range of financial services to a substantial and diversified client base. The company helps companies grow by providing investment opportunities and strategic advice.
Lee Coppersmith, a managing director at Goldman Sachs, suggests that dynamic growth in the US and other regions may justify the current bullish outlook, despite the common perception of elevated risk appetite as a sign of investor exuberance. In a note to clients, Coppersmith stated that elevated risk appetite alone does not constitute a sell signal when the macroeconomic backdrop is supportive, adding that optimistic periods can persist longer than anticipated due to healthy drivers like surging global growth optimism.
However, Coppersmith cautioned that “at these levels, small pullbacks tend to become more frequent and outsized equity returns are rarer”. This observation suggests that while the overall sentiment remains positive, investors should be prepared for increased volatility and potentially moderated returns in the near term.
Goldman’s indicator aligns with the generally positive outlook from Wall Street strategists, who largely anticipate a continued strong performance from the S&P 500 this year, reinforcing the prevailing sense of optimism in the market.
