Market Overview

Europe stocks hit an all-time high — and analysts say there’s more room to rise

European stocks hit a fresh record high on Thursday, and analysts are confident there is further upside as prices remain low compared to the U.S. The pan-European Stoxx 600 hit a high of 438.29 on Thursday, surpassing levels seen in late February 2020, just before the region’s stocks sold off as the coronavirus pandemic hit its nations hard. Thursday’s move marks a more-than 55% jump from a pandemic low seen on March 18, 2020.

J.P. Morgan analysts also said on Monday they see a 3% upside on Europe’s Stoxx 600 this year. In late March, analysts at Bank of America went even further, estimating a 7% jump for the largest European index by the end of the summer. The EU agreed last year to raise 750 billion euros ($897 billion) from public markets in so-called Next Generation EU funds. The money, however, is unlikely to be disbursed before the summer months.

European companies are expected to do better in the coming months, with Goldman Sachs analysts forecasting 40% earnings-per-share growth in Europe this year. Corporates are seen benefiting as the economy recovers, the region’s long-awaited fiscal plan in is rolled out and its vaccination campaign is stepped up. In a note Monday, Goldman analysts said the euro area was expected to “rebound sharply” into the summer. “Europe remains at a sharp discount to the U.S. market,” the analysts, led by Sharon Bell, said in the note.

U.S. equities surpassed their February 2020 levels in November — five months ahead of Europe — and have kept edging higher since. This broad move upwards in the United States came after Joe Biden won the presidential election and the positive sentiment was further boosted by his $1.9 trillion fiscal stimulus plan, which is already being deployed across the country. As a result, the S&P 500 is currently trading more than 20% higher than the levels seen in November.

Europe stocks hit an all-time high — and analysts say there’s more room to rise, CNBC, Apr 15

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