The latest bold call from the infamous investment bank seems to be very contrarian, with their view that the European STOXX 600 could rally as much as 18 percent this year. The caveat is that volatility is unlikely to go away and there could be further downside to come before the rally commences so it might be too early to take heed of their call and jump back into stocks. Often it’s the case that after a prediction from Goldman Sachs the markets react by moving in the direction of that call and this time this rather more hedged scenario means European indices can go in either direction for them to be right. This morning investors remain nervous as a mixed open is expected and once again crude is the talking point as prices continue to plunge towards $30 a barrel, which is likely to put energy stocks under further pressure with the debate intensifying around the sustainability of their dividend payments.
On the currency side GBPUSD has found a floor around the 1.4500 level and this morning we see manufacturing and industrial production from the UK where a weaker figure could add further pressure to sterling which has been in a downward spiral for the past few weeks. This ahead of Thursday’s BOE meeting where expectations are the first of the year will have more dovish undertones than before.