UBS and Deutsche Bank raise their forecast for the Stoxx 600: a bullish signal for European stocks
Leading global banks confirm confidence in the continued growth of the European stock market. UBS analysts have revised their target for the Stoxx Europe 600 index, raising it from 630 to 690 points by the end of this year. This implies a potential upside of about 8% from current levels. Deutsche Bank has also joined the bullish camp, reinforcing the overall positive sentiment.
Fundamental Growth Drivers
After a volatile first half of the year, the European market has not only recovered its losses but also reached new all-time highs. On July 3, the index recorded another record at 652 points, although it subsequently corrected to 639 points. Nevertheless, total year-to-date returns exceed 7%. The easing of geopolitical tensions, particularly around Iran, and the signing of a truce have acted as catalysts for the resumption of the upward trend.
Strategists at UBS, including Gerry Fowler and Sutanu Chheda, expect the rally to continue at least until 2027. Their long-term forecast predicts the index will rise to 760 points over the next year and a half, corresponding to a 19% increase. This forecast is the most optimistic among major banks, surpassing JPMorgan (680 points), which previously had the highest estimate. Bank of America, Kepler Cheuvreux, and others have also raised their targets.
Analysts note that the key drivers are: strong momentum in the artificial intelligence sector, stable revisions in the banking sector, and reduced pressure from defensive industries.
Opinions Diverge: Is There a Risk of a Correction?
However, market consensus is not unanimous. In a July survey of 18 strategists, the average expectation is that the index will rise to only 647 points by the end of 2026 — less than 1% above current levels. Notably, the number of "bearish" forecasts is declining: only 5 out of 18 respondents expect a decline, and just two predict a drop of more than 5%.
The most cautious estimate comes from TFS, which expects a 9% decline to 585 points. Societe Generale strategist Roland Kaloyan forecasts a correction of about 6%, to 600 points. According to him, high expectations leave no room for disappointment: any deviation from them could negatively impact market dynamics.
As a professional analyst, I believe the current bullish trend has a solid fundamental foundation, but the risks of overheating and inflated expectations are indeed real. Investors should closely monitor second-quarter reports — they will be a key test to confirm or refute the current optimism.