US-China trade war, geopolitical tensions could make investing environment volatile next year, Goldman Sachs says

Investors could face a bumpy ride next year as geopolitical tensions, including the US-China trade war, continue to bring volatility to the markets, according to Goldman Sachs Asset Management.

But, the global economy, while at a late stage in the economic cycle, is likely to avoid a recession next year, meaning there are opportunities for investors in equities, James Ashley, head of the asset management business’s international market strategy team, said.

“From a macro perspective, I think the key question going into the new year is going to be do we have a further extension of what is already unprecedented, really long global expansion or do we see the economy roll over? When you see the start of a recession, our view is very firmly in the camp of the former … there will not be a global recession,” Ashley said.

“That does not mean it’s going to be a smooth ride. That does not mean there will be an absence of shocks along the way and those shocks I think next year can take multitudes of forms. They could be geopolitical, that could be political, they could be markets related, they could be macro related, uncertainty around central banks and what the monetary policy outlook is, and, indeed, uncertainty around the fiscal policy outlook.”

The United States and China have been embroiled in a trade war for more than a year as the Trump administration tries to use tariffs on hundreds of billions of dollars of Chinese goods to force Beijing to change decades of trade and industrial policy.