European equity strategists maintain a bullish outlook for year-end, betting that strong corporate earnings and government spending will outweigh the inflationary pressures of high oil prices.
Median strategist target for Stoxx Europe 600 implies 5% upside, the most optimistic September forecast since 2018.
Brent crude is above $100 a barrel, fueling inflation worries and pressuring European equities, but the oil outlook itself is uncertain due to the Strait of Hormuz closure.
Wells Fargo and Yardeni cut S&P 500 year-end targets, while Citadel Securities remains constructive, leaving sentiment mixed.
Market strategists project the Stoxx Europe 600 will reach 670 points by year-end, representing a 5% gain from recent levels. Despite headwinds from elevated Brent crude prices and hawkish central bank policies, analysts cite robust corporate earnings growth and fiscal stimulus as primary drivers for continued regional equity performance.
Strategists believe that strong corporate earnings growth, positive macroeconomic data, and government fiscal stimulus will offset the negative impact of high oil prices and rising interest rates.