European equities are getting a split verdict from recently published research.
One camp of analysts sees meaningful downside for major continental indices, citing hard macro deterioration: euro-area GDP growth slowed to just 0.1% in Q1 2026, April PMIs fell into contraction at 48.6, and economic sentiment hit its weakest since late 2020. Germany's Ifo business climate is at 2009 lows, Italy is exposed to energy import costs, France is stagnating with strained public finances, and Portugal's consumer confidence is fading. The bearish view lands hardest on energy-heavy markets — the DAX and FTSE MIB in particular — with the CAC 40 and PSI 20 facing fiscal drag rather than acute shocks.
A more constructive thread of research holds a positive 12-month view on the broad Stoxx 600, pointing to a year-to-date rebound, roughly 10% consensus earnings growth expectations, AI sentiment spillover from the US, and relatively cheap valuations with no recession in sight. A separate longer-term bullish case singles out European renewables, citing geopolitical urgency, energy prices, and EU policy support.
The tension is really about horizon: near-term macro pain in the weakest national indices versus a broader earnings recovery story across the region.