Goldman Sachs Boosts STOXX 600 Target Amid Global Growth

Goldman Sachs increased its 12-month target for the STOXX 600 index to 625, citing global growth, improved corporate earnings, and attractive valuations. The index has seen renewed interest from U.S. investors. Upgrades were made in the financial and basic resources sectors, while insurance was downgraded.

Goldman Sachs has revised its 12-month target for the STOXX 600 index upwards from 615 to 625, following robust global economic growth, enhanced corporate earnings, and appealing valuations. This comes shortly after the index surpassed the 600 mark for the first time.

The brokerage attributes the valuation support to strong global growth and decreasing U.S. interest rates. The STOXX 600's 12-month forward price-to-earnings ratio is at 18.02, deemed relatively inexpensive compared to the S&P 500's 28.16. There is a surge in interest from U.S. investors seeking to diversify, with Europe becoming an attractive option.

Goldman foresees European equities gaining momentum due to light positioning after consistent sell-offs between 2022 and 2024, hinting at potential for further inflows. While the brokerage anticipates earnings-per-share growth for 2026 and 2027, it also points to the strong dollar as a persistent obstacle.

(With inputs from agencies.)