Deutsche Bank predicts 15% growth for European equities in 2025
Deutsche Bank sees fading risks, economic recovery lifting European stocks
European equities may stage a significant rebound in 2025, fuelled by improving economic prospects and a favourable outlook for corporate earnings, according to strategists at Deutsche Bank AG.
After underperforming U.S. stocks last year, the region’s equities are now positioned for potential outperformance, said the team led by Maximilian Uleer. Deutsche Bank’s strategists turned overweight on European stocks in a note published Tuesday, projecting the Stoxx 600 Index to climb to 590 points by year-end, reports Bloomberg.
This target, the most optimistic among analysts, implies a potential 15% gain from current levels. “Economic surprises continue to improve, political uncertainty is fading, and potential Chinese stimulus announcements add upside risk,” Uleer wrote. The strategist also pointed to favourable conditions, such as the formation of a new German government and low expectations for fourth-quarter earnings, as reasons to anticipate strong performance.
The Stoxx 600 has struggled to recover from a record high in September, weighed down by concerns over political risks in Europe, sluggish growth in China, and fears of new U.S. tariffs following Donald Trump’s return to the White House.
Closing the gap with U.S. markets
European stocks lagged far behind their U.S. counterparts in 2024, with the Stoxx 600 trailing the S&P 500 by 17 percentage points — marking one of the steepest underperformances since the European index's creation in 2008. While U.S. stocks are forecast to climb another 11% in 2025, Deutsche Bank expects European equities to benefit from several tactical triggers for outperformance.
Despite his optimism about Europe, Uleer remains constructive on U.S. equities, anticipating a positive year for the S&P 500. However, he argues that Europe's improving fundamentals, combined with bearish investor positioning, could lead to tactical gains for the region.
Broader optimism for European markets
Other strategists echo Deutsche Bank’s sentiment. Beata Manthey of Citigroup Inc. has also recommended that investors re-engage with European stocks, citing the region's extreme bearish positioning as a reason for potential recovery.
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