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US markets to see continued volatility: Goldman strategist

NYSE Trader on the floor
Lucas Jackson | Reuters

U.S. equity markets are "stuck" and in a "flat range", Goldman Sachs's Global Equities strategist Peter Oppenheimer told CNBC on Friday.

He explained that although there are signs that the economic conditions are improving a bit, earnings remain slow. The combination limits the potential for stocks to break out, he said. "But I would see continued volatility in rotation beneath the surface of the index."

U.S. stock markets closed higher on Thursday helped by earnings. The S&P 500 closed at its highest level since December on Thursday, helped by stronger than expected results from JPMorgan and the Dow Jones Industrial Average finished at its highest since July 20.

On Friday, the U.S. stock futures pointed to a slightly higher open ahead of more earnings results.

"Equities are not likely to break out on the upside. Some of the cyclical improvements are priced in. Things are not as bad as markets were pricing in January and there are areas of strength and I think the U.S. labor market is one of them," Oppenheimer added.

He further explained that the markets are entering a period of relatively low returns and that is true for all asset classes. "We are still in a relatively low if not zero interest rate world. Companies that can generate stable income are still very attractive," Oppenheimer said, adding that growth is very scarce and companies that can sustain low volatility growth are very much in demand.


Slow growth and uncertainty are currently the two issues impacting the global economy across all asset classes. Weak data from China this morning further fueled concerns over the slowdown of one of the largest economies in the world. However, export data earlier this week pointed to a robust recovery. Oppenheimer said sentiment in China could be positive for equities.

"There is improvement in the momentum of the global cyclical data and the manufacturing data," Oppenheimer said, adding "what we are seeing globally is bottoming out and I think that is helpful for markets. It comes after a long period of contraction."

He went on to explain that the China data is responding to some part of easing and to some degree the pressure that has come off as a result of the dollar weakening as U.S. interest rate expectations are being pushed out. "I think all of those are positives."

China posted its slowest economic growth since 2009 after official data showed the country grew 6.7 percent in the first quarter of 2016.

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