J.P. Morgan raised its year-end target for European equity indexes on Monday, citing corporate earnings strength and improvements in the geopolitical climate. The Wall Street brokerage lifted the benchmark STOXX 600 index target to 680 from 630, implying an upside of about 7% from Friday’s close of 635.88 points.
European Equity Index Targets
J.P. Morgan also raised its target for the MSCI Eurozone index – a performance gauge for euro-area equities, to 420 from 385. Global financial markets have been bearing the brunt of the months-long Middle East conflict that has triggered inflation and potential rate hike concerns, but a U.S.-Iran peace deal has brought some stability.
“As the market continues to unwind the conflict’s impact, Eurozone should stand to benefit,” J.P. Morgan analysts led by Mislav Matejka said in a note. “Additionally, if we see a broadening of the market in the 2H, Europe may once again become a compelling story.”
While risks remain, including renewed geopolitical escalation, J.P. Morgan said, Europe could look attractive if markets resume pricing out the impact of conflict and market breadth improves. A deeper-than-expected fall in oil prices, lower bond yields, reduced tariffs and a pickup in China’s economy could further support equities, the brokerage said, noting global investors remain underexposed to the region.
Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.
