Bank of America strategists pointed out that there is a risk that the market will underestimate the weakening momentum of economic growth and at the same time overestimate the boosting effect of increased productivity, making the European stock market prone to unexpected declines. The team, led by Sebastian Raedler, predicted that by the first quarter of 2026, the European Stoxx 600 index could drop more than 10% to 490 points. The strategists wrote, “We still expect that compared to high expectations, macro data performance may unexpectedly weaken, suggesting that risk premiums may expand and earnings per share expectations may be lowered.” They prefer essential consumer goods and pharmaceuticals, while believing that the financial and industrial sectors have the greatest downside risk. The European cyclical sector is expected to outperform the defensive sector by about 10%.

Bank of America strategists pointed out that there is a risk that the market will underestimate the weakening momentum of economic growth and at the same time overestimate the boosting effect of increased productivity, making the European stock market prone to unexpected declines. The team, led by Sebastian Raedler, predicted that by the first quarter of 2026, the European Stoxx 600 index could drop more than 10% to 490 points. The strategists wrote, “We still expect that compared to high expectations, macro data performance may unexpectedly weaken, suggesting that risk premiums may expand and earnings per share expectations may be lowered.” They prefer essential consumer goods and pharmaceuticals, while believing that the financial and industrial sectors have the greatest downside risk. The European cyclical sector is expected to outperform the defensive sector by about 10%.