• 10/02/2025 14:10

The worst of the stock market sell-off may be over, but it's time to stay alert – Goldman Sachs

The worst of the sell-off after a turbulent week in global markets may be behind us, but investors should hold off on making big bets on the market's direction for now. This was stated by Tony Pasquariello of Goldman Sachs, according to Reuters.

The worst of the stock market sell-off may be over, but we need to be on guard - Goldman Sachs

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In a client note published on Wednesday, which the agency reviewed, Pasquariello called the market movements over the week starting Friday a “global margin call” and outlined possible future directions for market movements.

Why this matters

Investors are struggling to determine whether the broad stock market rout, fueled by fears of a U.S. recession and the unwinding of yen-financed carry trades, is over.

They are also adjusting to the uncertainty surrounding the coming decline Federal Reserve rates and the US elections in November.

Context

This week's collapse stunned markets, with the S&P 500 falling nearly 6% in just five trading sessions in August and Japan's Nikkei index falling 10%. The yen has soared 10% in a month from 38-year lows.

Goldman noted that the entire trading community may not be completely risk-free: franchise flows and prime broker data did not reveal a huge amount of selling, although movements and show signs of significant risk transfer.

See also: Is a financial crisis near? The fall of the stock market in Japan, the USA, Europe and how will this affect Ukraine? (video)

Quote

“I think it’s difficult to make serious assessments of the S&P’s risk/return profile right now, so I would hold off on making big bets on the direction for now and look for an opportunity make money on market junctures.

The worst part of the forced de-risking is behind us, but I think the tilt is now towards continued selling from the trading community,” Pasquariello said.

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