Goldman upgrades global equities on earnings optimism

Here are some details:

* Middle East supply concerns have boosted oil prices, driving inflation and higher-for-longer rate fears, while mounting corporate and sovereign debt has fueled a global bond selloff that rattled markets in recent weeks

* Despite those headwinds, Goldman said the recent pullback has created a more attractive entry point for equities heading into third-quarter earnings, bringing its three-month outlook in line with its bullish 12-month stance

* The bank remains "overweight" on Asia and the US and "underweight" on Europe, while flagging that higher rates and energy prices remain the main near-term risks to equities

* It added that US midterm election uncertainty could potentially increase market volatility from current low levels

* Goldman prefers a "barbell strategy," with tech stocks at one end and bond-like equities on the other - both poised to benefit from rate relief, while also providing a hedge should tech sell off or growth concerns intensify

* It also upgraded its 12-month stance on government bonds to an "overweight" rating, adding, "We believe bonds should gradually move from portfolio headwind to hedge"