Leading global banks are revising their forecasts for the European stock market upward. Analysts at UBS and Deutsche Bank expect the Stoxx Europe 600 index to rise by 8% by the end of this year, demonstrating confidence in the resilience of corporate profits even amid ongoing geopolitical tensions.
After a volatile first half of the year, the European market has not only fully recovered but also reached new all-time highs. In early July, the index hit a record of around 652 points, before correcting to 639 points. Meanwhile, total returns since the start of the year exceed 7%, which is a strong signal for bulls.
UBS strategists have raised their target for the Stoxx 600 from 630 to 690 points, implying growth of approximately 8% from current levels. Moreover, the bank expects the rally to continue until 2027, forecasting the index to reach 760 points — an additional 19% over the next year and a half. UBS's forecast is higher than JPMorgan's (680 points), which previously offered the highest estimate. Bank of America, Deutsche Bank, and Kepler Cheuvreux have also joined the upward trend, raising their targets.
Strategists' opinions divided: consensus vs. bears
However, not all market participants are so optimistic. A survey of 18 strategists showed that the average forecast for the index at the end of 2026 is only 647 points — just 1% above current levels. Five out of 18 respondents expect a decline, with only two predicting a drop of more than 5%.
The most pessimistic estimate comes from TFS, forecasting a decline of 9%, to 585 points. Societe Generale strategist Roland Kaloyan expects 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.
My comment as an analyst: The gap between the bullish forecasts of UBS/Deutsche Bank and the conservative consensus indicates a high degree of uncertainty. The key risk is not weak profit growth, but that current prices have already priced in an overly optimistic scenario. The second quarter will be a litmus test: if earnings disappoint, the correction could be sharp.