Banking Giants Predict European Stocks to Outperform S&P 500 in 2025
Leading banking institutions JPMorgan Chase and Citi are bullish on the prospects of the Stoxx Europe 600 Index (SXXP) outperforming the S&P 500 (SPX) for the remainder of 2025. This shift in sentiment comes as investors seek alternatives to US assets amidst a changing economic landscape.
A recent Bloomberg survey, which involved 20 market strategists, revealed that both JPMorgan and Citi foresee the Stoxx Europe 600 Index emerging as a top performer driven by an improving economic outlook in the European Union.
According to the surveyed analysts, JPMorgan has set the highest target for SXXP, predicting a significant surge to a high of 580 points in the coming months. In contrast, the bank anticipates a decline for the S&P 500 during the same period.
Citi, on the other hand, expects SXXP to reach 570 points by the end of the year, citing a clearer outlook on corporate earnings as a key driver for the index’s growth.
Beata Manthey, a strategist at Citigroup, stated, “If we have already moved past peak earnings uncertainty, this could set the stage for additional upside and potential multiple re-rating, especially among more beaten-up cyclical sectors.”
The Stoxx Europe 600 Index tracks the performance of the 600 largest publicly traded companies across 17 European nations. As of the latest data, the index is trading at 545 points, reflecting a year-to-date increase of approximately 7.60%.
Contrary to the positive outlook on European stocks, Ernst & Young (EY) has raised concerns about the rally in the S&P 500. The accounting firm warns that the index may not be factoring in the potential negative impacts of tariffs, which could weigh on household demand and economic growth.
Gregory Daco, Chief Economist at EY, highlighted the risks posed by tariffs and anticipated a slowdown in the US economy, projecting a year-over-year GDP growth of just 0.6% by the fourth quarter of 2025.
As of the latest market close, the S&P 500 is trading at 5,802 points, with EY emphasizing that equity markets may be overly optimistic given the looming tariff risks.
Overall, the diverging outlooks from leading financial institutions underscore the evolving dynamics of global markets and the need for investors to consider alternative investment opportunities beyond traditional US assets.
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