Strategists have issued their most optimistic forecast for European stocks since 2018

Market strategists surveyed by Bloomberg have issued their most optimistic September forecast for the European stock market since 2018, the agency reports. According to the median estimate of their target index, the pan-European Stoxx Europe 600 index will end the year at 670 points. This implies a 5% increase from current levels. Bloomberg surveyed a total of 16 experts.

Analysts' responses indicate their confidence that strong corporate earnings growth will offset rising government bond yields and the negative effects of the spike in oil prices, which triggered the recent decline in European stock markets, Bloomberg explains.

The British investment firm Panmure Liberum remained the most optimistic respondent in the survey, expecting the Stoxx Europe 600 to rise 10% by the end of the year. Germany’s Deka Bank raised its target, while none of the survey participants lowered their forecasts. The most conservative estimate came from the French group Société Générale SA, which kept its target for the Stoxx Europe 600 unchanged at 600 points. This estimate implies a decline in the index of approximately 6% from current levels.

Moreover, the average market forecast (654 points) was lower than the median (670 points), according to Bloomberg.

In trading on September 18, the Stoxx Europe 600 fell 0.9% from the previous close, to 636.77 points. Over the past month, it has lost 2.6%.

Although September proved to be a volatile month for European markets due to a combination of rising oil prices, hawkish rhetoric from central banks, and weak seasonal factors, optimism regarding the region remains, notes Bloomberg. Analysts continue to raise their corporate earnings estimates: Citigroup’s earnings revision indicator for the region has been in positive territory for 20 consecutive weeks—the longest streak in the past five years, the agency notes. According to Bloomberg Intelligence, earnings for Stoxx 600 companies are expected to jump 15% in 2026 (a four-year high), followed by another 9.7% increase in 2027.

“We remain constructive on European stocks through mid-2027, supported by steady earnings per share growth,” noted Beata Manti, head of European equity strategy at Citi. At the same time, she continued, the bank “recognizes the growing risks to the recent cyclical improvement in macroeconomic indicators and corporate earnings trends, linked to geopolitics and interest rates.”

“A return to lower energy prices would be a long-awaited relief for the European stock market, but there are other potentially positive catalysts as well,” said Duncan Toms, a multi-asset strategist at the British banking group HSBC Holdings. He pointed to improving macroeconomic data. “If this trend continues, along with another strong earnings season in the third quarter, the region could once again post strong results by the end of the year,” the expert added. His target for the Stoxx Europe 600—670 points—has remained unchanged since January.

However, despite the general optimism, the European market continues to face pressure. Since its August highs, the Stoxx 600 has fallen by more than 3% amid a sharp rise in oil and gas prices caused by the conflict in the Middle East.

Societe Generale strategist Roland Kaloyan also highlights other market risks: “Additional risks include the unwinding of overleveraged positions in AI trading, the U.S. midterm elections, renewed tariff tensions, and European natural gas, whose reserves are at low levels. Together, these factors could lead to a further increase in the equity risk premium,” he believes (quoted by Bloomberg).

According to a Bank of America survey released earlier this week, asset managers’ confidence in European growth has weakened somewhat. The net percentage of European fund managers expecting regional stocks to rise in the coming months fell to 39% from 53% in August. At the same time, their expected 12-month return on stocks rose to an average of 6.3%, and 43% of investors predict that European and U.S. stocks will perform similarly over the course of the year. As the survey showed, the overwhelming majority of investors consider upward revisions to earnings forecasts to be the most likely reason for further growth in European stocks.

This article was AI-translated and verified by a human editor