European equities carried strong momentum through the week, with researchers pointing to banks, defense, and German large caps as core beneficiaries.
The DAX pushed toward fresh record territory across multiple sessions, with analysts citing earnings strength, hopes for a Middle East de-escalation, and improving German business surveys — one house lifted its base case for German GDP growth to around 0.8%. The Euro Stoxx 50 also notched its first record close since early July.
European banks remained the standout call. Multiple research notes flagged the sector's best profitability in over a decade, year-to-date gains north of 20%, and still-discounted valuations versus US peers — with structural tailwinds from higher rates and fiscal stimulus cited as durable drivers. Defense, luxury, and select energy names were also highlighted as attractive.
Not all views aligned: one thread warned that weak French and German PMIs could pressure indices, and another flagged near-term consolidation risk in SAP after its recent rally. Legacy European automakers were singled out as structurally challenged by Chinese EV competition.