European equities: constructive but narrow, with the bullish case sitting at the sector level rather than the broad index.
Researchers argue the Euro Area is at an earnings inflection after three years of stagnation. The published consensus now points to 17% EPS growth this year and 10% in 2027, with upward revisions following a strong Q2 season. Analysts highlight fiscal expansion lifting domestic demand, alongside EU infrastructure spending, Germany's new infrastructure laws, and rising defense budgets as structural tailwinds — industrials seen as a prime beneficiary. One camp of analysts also frames financials favorably in a higher-for-longer rate environment, projecting 12% earnings growth supported by solid balance sheets and elevated shareholder returns.
Conviction is uneven. Recent research flags overweights in Euro Area Financials and Industrials, while keeping Euro Area equities overall at core weight — an implicit nod that the US and Asia ex Japan still offer stronger cycle earnings growth.
On individual indices, a near-term tactical call sees the DAX opening modestly higher on a better-than-expected Ifo business climate print, read as improving German sentiment.