HSBC lifts STOXX 600 year-end target on stronger earnings outlook

HSBC ​lifted its year-end target ​for Europe's STOXX 600 index ‌for the ​first time this year on Wednesday, citing stronger earnings growth prospects, improving business sentiment and a healthier ‌economic outlook.

The brokerage expects the index to reach 680 points by year-end from its previous forecast of 670, implying about 6.3% upside from current levels, and ‌to reach 760 by the end of next year. HSBC is the latest ‌brokerage to turn more optimistic on European equities, as investors look past geopolitical risks and focus on the region's ability to withstand recent economic and energy shocks.

Recent data have also eased ⁠concerns ​that geopolitical tensions would ⁠significantly derail growth. London-based HSBC forecasts European earnings growth of 15.6% in 2026 and 15.4% in ⁠2027.

The brokerage said European companies are becoming increasingly domestically focused, with regional revenue exposure rising ​to its highest level since 2017, somewhat shielding them from currency ⁠movements even as overseas sales still account for about half of revenue. A weakness of the ⁠euro ​and other European currencies against the US dollar could provide an additional tailwind for corporate profits, HSBC added.

The brokerage upgraded Italy to "overweight" from "neutral", citing lower ⁠reliance on Middle Eastern gas imports, while downgrading France to "underweight" on weaker economic ⁠forecasts and deteriorating ⁠consensus estimates. HSBC also raised its year-end target for Britain's FTSE 100 index to 11,390 from 10,980, implying nearly 6.5% ‌upside from current ‌levels.