Goldman, JPMorgan Say European Stocks Are Set for Year-End Gains

Stock prices on the trading floor of the Euronext NV stock exchange in Paris. Photographer: Benjamin Girette/Bloomberg

(Bloomberg) -- Some of Wall Street’s top strategists say European stocks are likely to gain in the coming months, as a strong economic outlook helps shares break out of a narrow trading range.

Market forecasters at Goldman Sachs Group Inc. expect the Stoxx Europe 600 Index to rise 2% to around 560 points by the end of 2025, boosted by improving growth prospects, low positioning and relatively cheaper valuations.

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The team led by Sharon Bell also pointed to investors’ “growing desire to diversify away from US exposure, both due to dollar weakness and concentrated positions in tech.” The strategists expect the benchmark index to rise 5% over the coming year.

Bell correctly predicted in May that European stocks were unlikely to repeat their strong first-quarter performance. The benchmark has struggled to top record levels reached in March, with US tariffs and sluggish corporate earnings keeping investors on the sidelines. The Stoxx 600 has rallied 8.7% in 2025, slightly trailing the S&P 500’s 9.8% advance.

JPMorgan Chase & Co. strategist Mislav Matejka correctly called the consolidation in July. He said in a note on Monday that the loss of momentum was “healthy” and that sentiment was too bullish early in the year.

“The time to buy is approaching,” he wrote, citing a recent recovery in Chinese equities. The world’s second largest economy is a crucial market for European miners, automakers and luxury goods makers.

The strategist also sees euro-area equities potentially outperforming US peers over the next one to two months, although he warned of lingering risks from a weakening US labor market and political turmoil in France.

The CAC 40 Index underperformed last week after French Prime Minister Francois Bayrou called a confidence vote over a budget showdown. A Bloomberg poll of 17 strategists last month showed they expect the Stoxx 600 to end the year around 556 points on average.

--With assistance from Michael Msika.

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