European stocks are set for a standout second half as the prospect of peace in the Middle East eases stagflation risks. The Stoxx Europe 600 Index has risen about 1.5% this month after the US and Iran reached an interim deal to reopen the Strait of Hormuz, while the S&P 500 dropped 1%. Oil prices have declined nearly 30% in the past month, boosting economy-reliant sectors such as banks, automakers and luxury goods, and Europe’s lack of big artificial intelligence names is now seen as an advantage. Strategists at Goldman Sachs, Barclays and Deutsche Bank have raised expectations for European equity returns, and a Bloomberg survey shows forecasters expect the Stoxx 600 to finish 2026 near its all-time peak. The Stoxx Europe 600 trades at a forward price-to-earnings ratio of 15 times, a 25% discount to the S&P 500.
Bank of America Corp
Barclays PLC
Deutsche Bank Aktiengesellschaft
Goldman Sachs Group Inc
ASML Holding N.V.
Citigroup Inc.