Turmoil in the US is boosting global markets — but the chaos could still spread, Goldman Sachs warns

3 weeks ago 11

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Huileng Tan

Mon, Mar 17, 2025, 7:55 AM 2 min read

The US banal marketplace selloff is prompting investors to question opportunities successful planetary equities.
Emerging markets are outperforming arsenic US recession fears thrust investors to diversify their portfolios.
However, a US economical slowdown would inactive airs risks to planetary markets.

The caller banal marketplace rout successful the US has benefited equities elsewhere arsenic investors rotate investments — but their semipermanent gains could inactive hinge connected the American economy.

Last week, the US banal markets saw a brutal selloff implicit fears of a recession. The S&P 500 is down 4% and the Nasdaq Composite is down 8% truthful acold this year.

In contrast, the Euro Stoxx 50 scale is 10.4% higher twelvemonth to date, particularly aft Germany and Europe announced defence and authorities spending plans. Meanwhile, a China tech rally sent Hong Kong's Hang Seng Index up 20% portion the mainland's CSI 300 scale has risen astir 2%.

Such caller marketplace moves people an "unusual outperformance" for European and emerging markets stocks comparative to the US, analysts astatine Goldman Sachs wrote successful a Sunday note. But they said determination are limits to the decoupling — particularly if US economical enactment and maturation proceed to decelerate and an American recession becomes a "real risk."

"In those scenarios — wherever the US catches a atrocious acold — tighter fiscal conditions and higher hazard aversion thin to spill implicit into planetary markets arsenic well," they wrote.

The analysts wrote that markets successful Europe and China person been swiftly boosted by the EU and Germany's immense fiscal packages and AI developments, respectively. But if the US system and markets weaken further, these different markets whitethorn request much supportive factors to proceed their affirmative performance.

Goldman Sachs' study comes aft the caller cratering successful US stocks sent investors looking for marketplace winners elsewhere.

Meanwhile, the macroeconomic and marketplace outlook for the US — the world's largest economy, which accounts for astir one-quarter of planetary GDP — remains uncertain arsenic the 2nd Trump medication appears to person a higher tolerance for marketplace turbulence.

On Sunday, US Treasury Secretary Scott Bessent told NBC News that determination are "no guarantees" determination won't beryllium a recession. He besides said helium was "not astatine all" disquieted astir the volatile banal markets.

US President Donald Trump has besides precocious declined to regularisation retired the anticipation of a recession.

"The situation is that due to the fact that caller argumentation announcements are inactive coming and due to the fact that the timing of the interaction of uncertainty is not clear, it whitethorn instrumentality clip earlier the marketplace tin summation assurance that the system is avoiding much lasting harm adjacent if the information holds up," the Goldman Sachs analysts wrote.

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