---
title: "Global Markets Witness 'Historic-Level Reversal' Over Past Two Weeks; Goldman Sachs Warns Stock Win Rates Remain Low, Cautioning Against Overdraft Optimism"
type: "News"
locale: "en"
url: "https://longbridge.com/en/news/283584778.md"
description: "Following the largest oil supply shock in history triggered by the Middle East conflict, global cross-asset markets have experienced a rare 'return journey.' However, Goldman Sachs issues a clear warning: insufficient valuation reset, macroeconomic data improving slower than asset pricing, and unresolved tail risks of the war imply a high probability of a deep correction in the S&P 500 over the next 12 months, with current win rates remaining low"
datetime: "2026-04-22T02:13:36.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/283584778.md)
  - [en](https://longbridge.com/en/news/283584778.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/283584778.md)
---

# Global Markets Witness 'Historic-Level Reversal' Over Past Two Weeks; Goldman Sachs Warns Stock Win Rates Remain Low, Cautioning Against Overdraft Optimism

Global financial markets, after enduring the largest oil supply shock in history triggered by the Middle East conflict, have witnessed a historic-level two-way reversal across asset classes in recent weeks—shifting from panic selling to a comprehensive rebound. The speed of this rare 'return journey' has captured market attention. In response, Christian Mueller-Glissmann, Head of Asset Allocation Research at Goldman Sachs, along with his team, has addressed key concerns raised by investors.

Currently, global equity indices have risen significantly. U.S. technology stocks led the rally, surpassing pre-war levels. Brent crude oil and TTF natural gas prices fell sharply following news of the reopening of the Strait of Hormuz but remain above pre-conflict levels. Bond market recovery has been relatively sluggish, particularly in Europe, reflecting lingering concerns about the persistence of interest rate shocks.

Despite the rapid rebound, Goldman Sachs' cross-asset framework issues a clear warning: **after this stock market rally, the risk-return structure remains skewed. The probability of a decline exceeding 20% in the S&P 500 over the next 12 months remains high, while the probability of gains exceeding 35% is quite low.** Meanwhile, market pricing for growth prospects has clearly outpaced actual macroeconomic data, raising concerns about Overdraft optimism.

With volatility having substantively declined from its peak, Goldman Sachs believes the cost-benefit ratio of tail hedging tools has improved. Specific cross-asset hedging portfolio recommendations have been provided for scenarios of soft stagflation and de-escalation of hostilities.

## Rebound Recovers Most Lost Ground, Tech Stocks Lead U.S. Equities to New Highs

Since April, major global assets have generally reversed course. Goldman Sachs points out that since the peak of "risk-off" sentiment during this Middle East conflict, most of the losses have been recovered.

U.S. equities were led by the technology sector, showing the strongest performance with gains exceeding pre-war levels. This reflects solid earnings performance year-to-date and stems from the fact that AI disruptions and the high-interest-rate environment had already suppressed U.S. stocks before the outbreak of hostilities, leaving greater room for subsequent elasticity. Russell 2000 small-cap stocks also rebounded significantly. Asian and emerging markets remained among the top performers globally based on year-to-date cumulative returns. Banking stocks in both Europe and the U.S. also saw significant recoveries.

In contrast, Japanese government bonds, gold, and silver performed the worst during this two-way volatility. Low-volatility stocks and value stocks underperformed the broader market due to limited exposure to the technology sector. The bond market lagged behind the equity market's recovery pace overall. While European markets caught up somewhat following the announcement of the Strait of Hormuz reopening, their trend remains highly correlated with energy prices.

## Sentiment and Positioning Warm Up, Internal Divergence Remains Pronounced

Goldman Sachs' combined positioning and sentiment indicators show that this recovery was primarily driven by risk appetite indicators (RAI), systematic investors, option positions, and sentiment surveys. Notably, throughout the entire Middle East conflict, **fund flows, futures positions, and inflows into safe-haven bonds remained robust, with no large-scale withdrawals, which partly explains why overall sentiment did not plunge to extreme pessimistic levels.**

The most significant position reversal occurred in the options market—investors had previously significantly increased put/call ratios to hedge geopolitical risks but have recently shifted toward call hedging. Position-building operations by systematic strategies such as risk parity and CTA, along with concentrated covering by macro shorts, largely explain the speed and strength of this rebound.

Regarding hedge funds, net leverage dropped significantly due to concentrated pressure on consensus positions involving short-end interest rates, the U.S. dollar, and carry trades, combined with significant style and sector rotation within stocks. Although net leverage has since recovered from its lows, it still lags behind the overall market recovery rhythm, suggesting further room for position building. However, Goldman Sachs' RAI has rebounded rapidly and risen into positive territory. An RAI above 1 is typically a momentum signal rather than a contrarian indicator and does not constitute sufficient grounds for sustained expansion of risk appetite.

## Stock Market Win Rates Remain Low; Valuation and Position Resets Still Insufficient

Goldman Sachs' asymmetric stock framework indicates that none of the three necessary conditions supporting "better win rates" post-downturn have been fully met.

First, the magnitude of valuation and position resets has been moderate. RAI never turned deeply negative, the depth of the stock market drawdown was shallow, and the resilience of earnings growth prevented valuations from being sufficiently compressed. As the rebound progressed, valuations rose again.

Second, there are no signs of improvement in the second derivative of macro momentum. Goldman Sachs economists have lowered global GDP growth forecasts, raised inflation forecasts, and expect narrowing policy easing space for major central banks; related data shifts may gradually appear in the coming weeks.

Third, while tail risks from the Middle East conflict have eased, uncertainty remains. From the perspective of the crude oil options market, extreme tail risks of sharp oil price increases have normalized. However, Goldman Sachs emphasizes that whether this de-escalation can provide sustained support for risk assets depends on whether the war can truly move toward an end.

## Growth Pricing Ahead of Schedule; Q1 Earnings Season Key Verification Window

Markets have begun "looking forward," viewing the near-term growth impact of the Middle East conflict as a temporary disturbance, but the extent of this optimistic pricing ahead of schedule has alarmed Goldman Sachs. A comparison of Goldman Sachs' Global Growth Factor and Global Macro Surprise Index shows that during the recent rebound, asset price recovery has clearly outpaced actual improvements in macroeconomic data.

Currently, the macro surprise index remains positive outside Europe, **but it is expected to begin weakening. The upcoming Q1 earnings season will be a critical verification window.** Goldman Sachs' U.S. equity strategy team notes that S&P 500 earnings growth continues to be supported by the technology sector and AI capital expenditure, but the core issue outside the tech industry is: to what extent will soaring energy prices and supply chain disruptions erode corporate profits, especially profit margins? The European strategy team focuses on similar supply chain disruptions and European companies' high sales exposure to Asia and emerging markets, particularly the specific negative impacts brought by the blockade of the Strait of Hormuz.

More divergent growth data may lead to further divergence in sector trends but need not trigger a comprehensive "risk-off" unless the U.S. faces recession risks. Currently, the relatively flat yield curve suggests that recession risks have risen due to interest rate shocks, but they have not yet become the mainstream expectation.

## After Volatility Reset, Goldman Sachs Provides Two-Way Tail Hedging Strategies

As expectations for long-term de-escalation of the Middle East conflict intensify, overall volatility has undergone substantive compression, improving the cost-benefit ratio of tail hedging tools.

In a soft stagflation downside scenario (i.e., when the global growth pricing factor falls close to zero and interest rates lack substantive easing), Goldman Sachs recommends credit market hedges while favoring European equity put options. It notes that U.S. and Chinese stock markets may be supported by tailwinds from the technology sector and also recommends put options on cyclical currencies such as AUD/JPY and NZD/JPY.

In a de-escalation upside scenario (the "reverse gold combination"), Goldman Sachs favors carry trades and interest rate receiver strategies, leaning towards allocating S&P 500 call options and European interest rate receiver positions. Upside trades in credit should be avoided because credit spreads did not widen significantly during this turmoil, and equity assets offer greater upside elasticity.

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