Some top Wall Street strategists say European stocks could rise in the coming months as a strong economic outlook pushes the market beyond a narrow trading range. Goldman Sachs strategists led by Sharon Bell forecast the pan-European STOXX 600 index to rise 2% to around 560 points by the end of 2025, benefiting from improved growth prospects, lighter positioning, and relatively cheaper valuations. The strategists also noted investors' "growing desire to diversify exposure away from the US, both due to a weaker dollar and due to high concentration in Tech." These strategists also expect the STOXX 600 to gain 5% over the next year.

It is reported that Sharon Bell correctly predicted in May this year that European stocks were unlikely to repeat their strong first-quarter performance. Due to US tariffs and sluggish corporate earnings keeping investors on the sidelines, the STOXX 600 has struggled to reach new highs since hitting a record high in March. Since the start of 2025, the STOXX 600 has gained 8.7%, slightly less than the S&P 500's 9.8% gain over the same period.

Meanwhile, JPMorgan strategist Mislav Matejka, who correctly predicted a consolidation in European stocks in July, said in a report on Monday that the loss of momentum was "healthy" and that market sentiment at the start of the year was overly optimistic. "The time to buy (European equities) is approaching," he said. He also mentioned the recent recovery in Chinese stocks. As the world's second-largest economy, China is a key market for European miners, carmakers, and luxury goods makers.

The strategist also believes European stocks could outperform US stocks over the next one to two months, although he warned that a weakening US labor market and political turmoil in France remain potential risks. On August 25, French Prime Minister Bérou stated that the French government would proactively seek a vote of confidence in the National Assembly, planned for September 8. He hopes this move will secure the National Assembly's support for the government's budget plans. However, polls show over 70% of the public do not want the French government to win the vote of confidence in the National Assembly (the lower house of parliament). This suggests France may once again be plunged into political turmoil.

It is worth mentioning that a Bloomberg survey of 17 strategists last month showed that strategists on average expect the STOXX 600 to end the year around 556 points, implying a gain of about 1% from current levels.