J.P. Morgan updated its year-end 2026 targets for a set of European equity indexes in a report published Monday, saying accelerating earnings growth and the potential for wider investor participation support higher levels.
The bank raised its Stoxx 600 target to 680 from 630 - a level that implies roughly 7% upside from the index’s then-current reading of 636. It also lifted the MSCI Eurozone target to 420 from 385, which equates to about 10% upside from a cited current level of 383.
For the UK benchmark, J.P. Morgan moved its FTSE 100 target up to 11,000 from 10,300, implying roughly 5% upside from the FTSE’s referenced level of 10,508. The broker additionally set a 2,750 target for MSCI Europe - around 8% upside from its stated level of 2,536 - and a 6,800 target for the Euro Stoxx 50, implying about 9% upside from the index’s cited reading of 6,222.
"We update the targets in this report, looking for further upside from here, ranging from 5-10%," J.P. Morgan said in the note.
The bank also reviewed how its previous targets performed. The prior Stoxx 600 target of 630, published in last November’s Year Ahead outlook, had implied 12% upside at the time and has since delivered 13% upside, with the index reaching a year-to-date high last week. The earlier MSCI Eurozone target of 385 had implied 15% upside when issued and has delivered 14% to date.
J.P. Morgan raised its Eurozone earnings-per-share forecasts, flagging a rebound after three weaker years. The updated forecast for Eurozone EPS growth is 18% for 2026 and 12% for 2027, up from previous estimates of 13% for 2026 and 10% for 2027.
For the UK, the analysts increased their 2026 EPS growth estimate to 18% from 8%, while trimming the 2027 forecast to 5% from 7%.
The note also commented on valuation: the Eurozone’s 12-month forward price-to-earnings multiple is quoted at 15 times. J.P. Morgan said this multiple is likely to at least remain at current levels and could move slightly higher, supported in its view by lower oil prices, rangebound bond yields and inflation expectations that remain anchored.
Regional performance since Nov. 24, 2025 varied across markets. J.P. Morgan highlighted that MSCI Spain has gained 22.3% and MSCI Italy 18.1% over that period, while MSCI Germany has lagged with a 5.4% gain. The broker attributed Germany’s relative underperformance in part to the country’s "disproportionate exposure to geopolitical and energy shocks."
On portfolio positioning, J.P. Morgan said it remains "long beta, including Consumer plays," and retains positive calls on Semiconductors, Industrials and Mining. The bank expects Banks to perform well, noting their leverage to PMIs and to credit growth. By contrast, it said it remains cautious on Business Services, Software and Media, and said it is "still not excited about Defense," having recommended reductions in that sector since last September after a strong prior run.
Finally, J.P. Morgan’s regional ratings place the Eurozone as "overweight," the UK as "neutral" and the U.S. as "neutral" within developed markets, while the firm rates emerging markets as "overweight."
Implications for investors
- Revised index targets reflect a more optimistic earnings trajectory for 2026 in Europe and the UK, with potential modest upside in benchmark levels across the region.
- Sector preferences and cautions outlined by J.P. Morgan point to where the bank expects cyclical exposure and growth sensitivity to matter most within Europe.