Goldman Sachs: Strong earnings support European equities, but rates, elections, and energy weigh on them

AI summary world

Goldman Sachs believes European stocks and the energy sector can support earnings growth, forecasting a 7% increase in the STOXX Europe 600 over the next 12 months. Europe offers advantages such as a higher FCF yield compared to US big tech and serves as a diversification tool, but the outlook is threatened by several factors. Key risks identified include rising bond yields, uncertainty related to the 2027 election cycle, and a possible escalation of the energy crisis, with forecasts of volatile gas prices. For this reason, a balanced mix between cyclical and defensive sectors is recommended, with strategic overweight positions in technology and banks.