European stock markets 2024: expectations dampened and forecasts divided - a review and outlook from a financial expert's perspective

European stock markets 2024: expectations dampened and forecasts divided - a review and outlook from a financial expert's perspective

According to a report by finanzmarktwelt.de, European stock markets have not been particularly successful compared to the US market over the last twelve months. The Stoxx 600 Index only rose by 4.18%, while the S&P 500 rose by 20.77% and the Dax by 10.56%. A recent survey of 16 analysts found that there is little upside potential for European stock markets by the end of 2024.

According to a recent Bloomberg survey, stock market strategists agree that the Stoxx Europe 600 index will end 2024 at 477 points, representing just 5 points of upside from current levels. Most analysts expect share price gains to be limited by subdued economic and earnings growth. Roland Kaloyan of Société Générale says earnings expectations for 2024 are too high and markets are pricing in too many and too early interest rate cuts from the European Central Bank. Therefore, he believes a downside potential is likely.

The range of forecasts for the Stoxx 600 Index has also expanded. While TFS Derivatives predicts a decline of almost 13%, Barclays, Citigroup and Deutsche Bank see upside potential. UBS raised its forecast from 410 to 450 to reflect falling bond yields.

Given these assessments, it can be assumed that European stock markets will face challenges in 2024. Investors should wait for pullbacks before buying again as the upside potential is limited and the downside potential could intensify.

The subdued expectations regarding the European stock market could lead to cautious investment behavior. This could lead to investors increasingly turning to alternative forms of investment or international markets. In addition, companies may reconsider their expansion plans or increase their focus on efficiency improvements to counteract possible economic challenges.