J.P. Morgan has raised its December 2026 targets for several major European stock indexes, citing stronger earnings growth and the potential for gains to spread across more sectors.
The investment bank now expects European equities to deliver further upside of between 5% and 10% from current levels.
J.P. Morgan Raises Stoxx 600 Target
J.P. Morgan increased its target for the Stoxx Europe 600 index to 680 from 630.
The new forecast implies potential upside of around 7% from the index’s current level of approximately 636.
The bank’s previous Stoxx 600 target of 630 was published in its annual outlook last November. At the time, it suggested 12% upside.
Since that forecast was released, the index has gained approximately 13% and reached a new year-to-date high last week.
Eurozone Equity Target Increased
J.P. Morgan also raised its MSCI Eurozone target to 420 from 385.
The revised forecast represents potential upside of around 10% from the index’s current level of 383.
Its previous MSCI Eurozone target had suggested a gain of approximately 15%. The index has since delivered a return of around 14%.
The bank continues to rate the Eurozone as “overweight,” indicating that it expects the region to outperform other developed markets.
FTSE 100 Target Raised to 11,000
J.P. Morgan lifted its FTSE 100 target to 11,000 from 10,300.
That forecast implies around 5% upside from the UK index’s current level of approximately 10,508.
The bank remains neutral on the UK equity market despite significantly raising its earnings growth forecast for British companies.
MSCI Europe and Euro Stoxx 50 Targets Lifted
The investment bank set a target of 2,750 for the MSCI Europe index.
This would represent potential upside of approximately 8% from its current level of 2,536.
J.P. Morgan also established a target of 6,800 for the Euro Stoxx 50. The forecast points to around 9% upside from the index’s current level of 6,222.
Overall, the bank expects Europe’s leading equity markets to generate additional gains through the end of 2026.
Eurozone Earnings Growth Forecast Improves
J.P. Morgan raised its forecast for Eurozone earnings after three years of relatively weak growth.
The bank now expects Eurozone earnings per share to rise by 18% in 2026 and by another 12% in 2027.
Its previous projections had pointed to earnings growth of 13% in 2026 and 10% in 2027.
The improved outlook suggests that corporate profits could become a more important driver of European stock market returns.
UK Earnings Forecast Receives Major Upgrade
For the UK, J.P. Morgan raised its 2026 earnings-per-share growth forecast to 18% from 8%.
However, the bank lowered its 2027 UK earnings estimate to 5% from 7%.
The revised figures indicate that British companies could experience a strong earnings rebound in 2026, followed by slower growth the following year.
European Valuations Could Remain Supported
The Eurozone’s 12-month forward price-to-earnings ratio currently stands at around 15 times.
J.P. Morgan expects the valuation multiple to remain near that level and believes it could move slightly higher.
Lower oil prices, relatively stable bond yields and anchored inflation expectations could all support European equity valuations.
These conditions may allow share prices to rise alongside improving corporate earnings.
Spain and Italy Outperform Germany
European stock market performance has varied significantly between countries.
Since November 24, 2025, the MSCI Spain index has gained 22.3%, while MSCI Italy has advanced by 18.1%.
By comparison, MSCI Germany has risen by only 5.4%.
J.P. Morgan partly attributed Germany’s weaker performance to its greater exposure to geopolitical risks and energy-market shocks.
J.P. Morgan Favors Cyclical Sectors
J.P. Morgan remains positioned for stronger market performance and continues to favor higher-beta stocks, including consumer-related companies.
The bank also maintains a positive outlook on semiconductors, industrial companies and mining stocks.
Banks could also perform well because they tend to benefit from improving business activity, stronger purchasing managers’ indexes and expanding credit growth.
Software, Media and Defense Stocks Face Caution
J.P. Morgan remains cautious about business services, software and media companies.
The bank also continues to hold a less positive view of defense stocks after their strong previous rally.
It has recommended reducing exposure to the defense sector since September, arguing that much of the positive outlook may already be reflected in valuations.
Eurozone and Emerging Markets Remain Preferred
Within developed markets, J.P. Morgan rates the Eurozone as overweight.
The UK and the United States both carry neutral ratings.
The bank also remains overweight on emerging markets, suggesting it expects them to deliver stronger relative performance than several developed-market regions.
