Goldman Sachs (NYSE:GS) has cut its end-of-year target for the FTSE 100 to 7,900, slightly lower than its previous 8,000 prediction.
The investment bank notes this implies a 3.0% price return and 7.3% total return.
"We think FTSE 100 remains largely immune from the domestic growth concerns," it said.
However, as an asset class, bonds now provide a reasonable alternative to equities with both UK and US 10-year bond yields are above 4%, Goldman added.
"We see globally equities trading in a 'Fat & Flat' range and tend to highlight companies either with very strong growth prospects or those returning cash to shareholders via dividends/buybacks," it said.
On this last point, the UK has a lot to offer, Goldman believes, with high buybacks supported by one of the highest free cash flow yields globally.
It thinks the recent rise in energy prices could continue to support this amongst energy stocks which provide a substantial share of the buybacks.