Improved Economic Growth Outlook Provides Support, Goldman Sachs and Morgan Stanley Sing the Praises of European Stocks

According to the Zhitong Finance APP, some top strategists on Wall Street have indicated that European stock markets may rise in the coming months as a strong economic outlook drives the stock market to break out of a narrow trading range. Led by Sharon Bell, Goldman Sachs strategists expect the pan-European Stoxx 600 index to rise by 2% to around 560 points by the end of 2025, benefiting from improved economic growth prospects, low positioning, and relatively cheaper valuations. The strategists also noted that investors are "increasingly eager to diversify their exposure to the U.S. market, both due to a weaker dollar and because of an overly concentrated position in the tech sector." These strategists also anticipate a 5% increase in the pan-European Stoxx 600 index over the next year.

It is reported that Sharon Bell correctly predicted in May this year that the European stock market was unlikely to replicate its strong performance from the first quarter. The pan-European Stoxx 600 index has struggled to reach new highs since hitting a record high in March, as U.S. tariffs and sluggish corporate earnings have kept investors on the sidelines. Since 2025, the pan-European Stoxx 600 index has risen by 8.7%, slightly lower than the S&P 500 index's 9.8% increase during the same period.

Meanwhile, Mislav Matejka, a JPMorgan strategist who correctly predicted the consolidation of the European stock market in July, stated in a report on Monday that the weakening momentum is "healthy" and that the market sentiment at the beginning of the year was overly optimistic. He said, "The time to buy (European stocks) is approaching." He also mentioned the recent recovery of the Chinese stock market. As the world's second-largest economy, China is an important market for European mining, automotive manufacturers, and luxury goods manufacturers.

This strategist also believes that in the next one to two months, European stocks may outperform U.S. stocks, although he warned that a weakening U.S. labor market and political turmoil in France remain potential risks. French Prime Minister Élisabeth Borne stated on August 25 that the French government would actively seek a confidence vote in the National Assembly, with the vote scheduled for September 8. She hopes to gain support for the government's budget plan through this move. However, polls show that more than 70% of the public do not want the French government to win a confidence vote in the National Assembly (the lower house of parliament). This indicates that France may once again fall into political turmoil.

It is worth mentioning that a Bloomberg survey of 17 strategists last month showed that strategists expect the pan-European Stoxx 600 index to close at around 556 points by the end of the year, which implies an increase of about 1% from the current level