Is Europe’s Market About to Break Out — or Break Down?

This article first appeared on GuruFocus.

European stocks are grinding through a year of hesitation. A Bloomberg survey of 18 strategists projects the Stoxx Europe 600 Index to end 2025 near 560barely a percent below current levelswith forecasts ranging from Societe Generale’s (SCGLY) cautious 530 to Citigroup’s (NYSE:C) more neutral 570. Citi strategist Beata Manthey said recent volatility from China and the latest earnings season could continue to test sentiment, though she sees stronger momentum emerging by mid-2026 as earnings delivery improves. The message: investors may need patience before Europe finds its next real leg higher.

The continent’s equity markets have largely sat out the global tech boom. While the Stoxx 600 finally reached a record high this month, its gains remain modest versus the S&P 500 (SPY). Trade friction between Washington and Beijing has reignited macro worries, pressuring Europe’s export-driven industries from automakers to miners. Bloomberg Intelligence expects a mild earnings pullback in 2025 before an 11% rebound in 2026. Yet a stabilizing political backdrop in France and investor positioning that’s far from overstretched have kept the floor intactat least for now.

Even so, the fear of missing out is creeping back in. A Bank of America survey showed many fund managers are hesitant to trim European exposure, worried they could miss a potential rally into year-end. JPMorgan’s Mislav Matejka upgraded eurozone equities this month with a 580 target, while Barclays strategist Emmanuel Cau sees the index steady at 570 as valuations reset. UBS remains the most bullish at 600, implying a 6% gain, while Societe Generale’s Roland Kaloyan stays defensive with a 530 view, citing lingering geopolitical and earnings pressures. The debate is still openbut if history repeats, the final quarter could again surprise on the upside.