Strategists Are Most Bullish on European Stocks in Eight Years
Fri, September 18, 2026 at 9:23 AM GMT+3 4 min read
(Bloomberg) -- Market strategists have given the most bullish September forecast on European stocks since 2018, as strong corporate earnings help offset the impact of high energy prices and rising bond yields, according to a Bloomberg survey.
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The Stoxx Europe 600 Index will finish the year at 670 points, based on the median target from 16 strategists polled by Bloomberg, implying gains of 5% from Wednesday's close. That's the most optimistic view this month's edition of the survey has produced since 2018.
The responses signal conviction among forecasters that strong earnings growth and a wave of government spending will counter the harm from a surge in oil prices that triggered recent declines in European equities.
Panmure Liberum retained its spot as the biggest bull in the poll, predicting gains of 10% for the benchmark index by year end. Deka Bank increased its target, while there were no downgrades. Societe Generale SA was the most bearish, with an unchanged 600 points forecast. The average prediction in the poll is lower than the median, at 654 points.
"A reversal to lower energy prices would be a welcome relief to the European stock market, but there are other potentially positive catalysts," said Duncan Toms, a multi-asset strategist at HSBC Holdings Plc. He cited improving macro-economic data and the positive implications that holds. "A continuation of this alongside another strong earnings season in the third quarter can see the region perform well again to year-end," he added. The strategist has stuck to a 670 target since January.
European equities have come under pressure in the past month from sharp increases in oil and gas prices, because of the unresolved Iran war. The Stoxx 600 has fallen 2.7% from a peak in August. The Strait of Hormuz is still effectively closed, and some re-escalation in the conflict has hit sentiment.
Brent crude remains above $100 a barrel, fueling inflation angst and making interest rate increases from central banks more likely. The European Central Bank has turned more hawkish after raising rates this month and the swap market expects three more such moves through June. As for the Bank of England, four rate hikes are almost fully priced in by July next year after the central bank stayed on hold Thursday.
"Additional risks include an unwinding of crowded positioning in the AI trade, the US midterm elections, renewed tariff tensions and European gas, for which inventories are low," said SocGen strategist Roland Kaloyan. "Together, these factors could drive a further rise in the equity risk premium."
Confidence is faltering across the Atlantic, too. Strategists at Wells Fargo & Co. and Yardeni Research Inc. reduced their year-end targets for the S&P 500 this week. Still, Citadel Securities' Scott Rubner said on Thursday he was "increasingly constructive" on equities into the year-end.
In Europe, the bull case has softened among asset managers, according to a Bank of America Corp. survey published earlier this week. A net 39% of European fund managers expect upside for regional equities over the next few months, down from a net 53% in August. At the same time, their expected 12-month equity returns rose to 6.3% on average, with 43% of investors predicting that European and US equities will perform similarly over the next 12 months. The vast majority of investors see earnings upgrades as the most likely reason for further gains in European equities, the survey showed.
Overall, while September has been more volatile due to a combination of higher oil prices, more hawkish central banks and poor seasonality, optimism about the region persists. Most importantly, the outlook for earnings growth is bright. The macro-economic backdrop remains strong in the region and globally, with positive economic surprises and expanding manufacturing activity. Fiscal stimulus, especially in Germany, has also started to kick in.
Analysts have continued to upgrade profit estimates, with a Citigroup Inc. gauge of earnings revisions for the region in positive territory for 20 consecutive weeks, the longest streak in five years. Earnings at Stoxx 600 firms are expected to jump 15% in 2026, the highest in four years, followed by another 9.7% surge in 2027, according to data compiled by Bloomberg Intelligence.
"We remain constructive on European equities through mid-2027, supported by solid EPS growth, while acknowledging rising risks to the recent cyclical improvement in macroeconomic and earnings trends from geopolitics and rates," said Beata Manthey, Citi's head of European equity strategy.
--With assistance from Sagarika Jaisinghani, Alison David and Leslie Nutakor.
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