Strategist Bullishness on European Equities Hits 8-Year High
nashnova research
A Bloomberg survey of 16 strategists sets a median year-end target of 670 points for the Stoxx 600, implying roughly 5% upside — the most optimistic reading since 2018 — yet oil above $100 and central-bank rate hikes are testing that conviction.
How bullish are strategists, exactly?
The 16-strategist median year-end target is 670 points, about 5% above Wednesday's close.
Panmure Liberum, the most bullish house, sees the benchmark rising 10% by year-end; Deka Bank raised its target — no firm cut theirs.
Société Générale is the most cautious at 600 points. This means → even the biggest bear in the room is not calling "sell."
What underpins the bull case?
Stoxx 600 constituents are forecast to grow earnings by 15% in 2026, the highest in four years, with another 9.7% expected in 2027.
Citi's earnings-revision indicator — tracking upgrades versus downgrades — has been positive for 20 straight weeks, the longest streak in five years.
In plain terms = companies are making more money, and analysts keep revising those numbers higher. That is the bull case's hardest evidence.
Strategists also bet that expanding government fiscal spending will further support corporate revenue.
What is the biggest risk?
A de-facto blockade of the Strait of Hormuz has pushed Brent crude above $100 a barrel; the Stoxx 600 has already pulled back 2.7% from its August high.
Elevated oil prices stoke inflation. This means → central banks must keep hiking, not pause as markets had hoped.
The ECB turned hawkish after hiking this month; swaps price three more hikes by June. The Bank of England held rates, yet markets price four hikes by next July.
In plain terms = earnings are rising, but so is the cost of borrowing — two forces pulling in opposite directions.
What other landmines are out there?
SocGen strategist Roland Kaloyan flags four additional risks: crowded AI-trade unwinds, U.S. midterm elections, renewed tariff friction, and low European natural-gas inventories.
Together these could push the equity risk premium — the extra return investors demand to compensate for uncertainty — higher still.
This reflects a fragility in the bull thesis: earnings growth is real, but external variables are numerous, and any single trigger could break the rhythm.
How are fund managers themselves voting?
A Bank of America survey shows a net 39% of European fund managers expect regional stocks to rise in the coming months, down from 53% in August — short-term enthusiasm is cooling.
Yet the average expected return over 12 months rose to 6.3%, and 43% of investors see European and U.S. equities performing roughly in line.
This means → fund managers are "cautious near-term, still constructive medium-term," and they almost unanimously view earnings upgrades as the key driver for the next leg up.
What does it all come down to?
Citi's European equity strategy head Beata Manthey is blunt: constructive through mid-2027, but acknowledges geopolitics and rates as near-term upside risks to the macro outlook.
Put simply = whether the bull case delivers hinges on one variable — can oil prices pull back before year-end?
Oil stays high → inflation persists → hikes continue → valuations compress. That causal chain is the clearest risk path for European equities right now.
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