The pan-European index, currently trading near record highs, has surged 7.4% year-to-date, effectively erasing all losses incurred during the three-month Middle East conflict. Barclays analysts noted that the move to a "peace target" reflects an expectation of stronger earnings growth and a valuation recovery as geopolitical risks subside throughout the second half of the year. This revised forecast implies an additional 5.3% upside from Tuesday’s close of 636.
Barclays pivots to growth as STOXX 600 target hits 670
A preliminary peace deal between the United States and Iran to reopen the Strait of Hormuz has prompted Barclays to raise its year-end STOXX 600 target to 670. The brokerage officially abandoned its bearish stance on European equities, signaling a shift as regional markets recover from months of geopolitical volatility.
Falling oil prices and stabilizing macroeconomic indicators are expected to support this rebound, potentially broadening global market leadership beyond the technology-heavy U.S. sector. In a strategic reshuffling of their portfolio, Barclays upgraded the luxury sector to overweight, despite its lackluster performance this year, while moving to underweight on healthcare. This shift aligns with a broader market sentiment change; Deutsche Bank recently moved to a neutral position on U.S. versus European equities, citing a narrowing growth gap that diminishes the relative outperformance of American stocks.
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