Goldman Sachs: The stock market may experience short-term adjustments, but fundamentals remain solid. History shows that geopolitical shocks can present opportunities.

K-LinePoet · 2026-03-28T09:31:36+00:00

Goldman Sachs expects Brent crude oil prices to average $98 in March and April, potentially falling back to $71 later this year. Although rising oil and gas prices impact the economy and stock markets, the decline in U.S. stocks is limited. The Federal Reserve is expected to cut interest rates in September and December. A weakening labor market may increase economic adjustment risks, but strong fundamentals help resist a bear market. Geopolitical shocks could also present investment opportunities.

K-LinePoet

2026-03-28 09:31:36

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Goldman Sachs released a research report stating that the current estimate for March to April shows the average price of Brent crude oil at $98 per barrel, which is 40% higher than last year’s average level, and is expected to fall to $71 in the fourth quarter of this year. Although the sharp rise in oil and gas prices has a negative impact on economic growth and inflation, the U.S. stock market is currently only down about 4% from its high, while global indices remain close to cyclical highs; valuations in all regional stock markets are far above long-term averages, with the exception of the Chinese stock market.

On the other hand, the bank has delayed its expectation for the U.S. Federal Reserve’s first interest rate cut from June to September, with the second cut anticipated in December, estimating that the target range for the federal funds rate will be between 3% and 3.25%. The longer oil prices remain high, the greater the risk that inflation will weaken the bond market and trigger a reassessment of stock market valuations, thereby tightening financial conditions (FCI) further.

Additionally, momentum in the labor market data is weakening, which may diminish the economy’s resilience to further shocks. However, from another perspective, it may also prevent energy cost inflation from transmitting to the core level and provide more room for policy easing.

Overall, the bank believes that the risk of adjustment in the stock market is increasing, but strong fundamentals can withstand a bear market, and adjustments are expected to be short-lived, with a more positive mid-term backdrop, including resilient earnings and healthy balance sheets. Moreover, historical experience shows that geopolitical shocks often present opportunities rather than sustained harm. Even though global attention on renewable energy has waned, the war has reinforced the necessity to invest in defense, energy resilience, and reliable power, which continues to support the demand for new technologies.

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