Yeliz Akmaca 
Goldman Sachs CEO David Solomon evaluated the market impact of Middle East conflicts at a business summit in Sydney. According to Solomon, investors have not fully digested recent developments, and the process may take “a few weeks.”
With geopolitical risks rising, S&P 500 losses remaining below 1% have surprised even the major bank.
Solomon noted that market reactions were calmer than expected:
“Looking at market responses… given the magnitude, I expected a stronger reaction.”
How Are Markets Reacting Now?
Energy prices are rising sharply. Expanding conflict has triggered supply concerns, pushing oil prices higher. Investors have shifted from riskier assets to safe havens, strengthening the dollar while global stock indexes saw modest declines. Losses on Wall Street were relatively mild; the S&P 500 recovered early-day losses over two sessions, ending with a drop below 1%.
Solomon emphasized that this calm reflects how geopolitical events usually do not directly affect economic growth. However, cumulative effects may emerge later:
“We haven’t seen the cumulative effect yet. There’s still a lot unknown, so predictions are difficult.”
What Is the US Economy’s Condition?
Solomon stated that strong macroeconomic fundamentals make the US economy resilient. Looser monetary policy and regulatory relief have helped support growth.
According to the CEO, the US economy may “overheat slightly” this year, potentially pushing inflation above expectations. Private credit portfolios remain healthy, but during long credit cycles, slower growth could expose weaker lending standards:
“Competition in capital allocation is putting pressure on lending standards. If a slowdown or recession occurs, weak spots will become more evident.”
Artificial Intelligence Is Reshaping White-Collar Work
Goldman Sachs is using AI to automate processes. While headcount remains largely stable, productivity is increasing and employees are being redirected to different roles. Short-term effects are beginning to be felt, but no long-term labor shortage is expected.
The CEO’s remarks are critical for understanding market risk perception and workforce planning in banking. Solomon described AI’s effects as “complex,” noting that short- and medium-term impacts are not yet fully clear.
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