Major banking institutions, such as JPMorgan Chase and Citibank, predict that a foreign stock market index could surpass the S&P 500 (SPX) in performance this year, as investors look for diversification opportunities outside of U.S. assets.
20 market strategists from Bloomberg’s survey suggest that the Stoxx Europe 600 Index (SXXP) is expected to surpass the S&P 500 during the rest of 2025. This forecast is based on a strengthening economic climate in the European Union, with JPMorgan and Citi being among those who predict this outperformance.
Among the surveyed experts, JPMorgan anticipates the highest potential for SXXP, suggesting that the Stoxx Europe 600 Index could peak at around 580 points within the upcoming months. Simultaneously, they forecast a downturn in the S&P 500.
This year, according to Citi’s prediction, the SXXP index could reach a high of 570 points as the market gains better understanding of corporate earnings reports.
Says Citigroup strategist Beata Manthey,
If the period of maximum doubt about earnings has ended, it might pave the way for further gains and even a rise in valuation multiples, particularly for those cyclical sectors that have been hardest hit.
The Stoxx Europe 600 Index, which follows the performance of the 600 largest publicly traded companies in 17 European countries, currently stands at 545 points following trading on Friday. This represents an approximately 7.60% increase since the beginning of the year.
As a researcher, I’ve recently observed a positive trend in the banking sector, which seems to contrast with the warning issued by Ernst & Young (EY). They have expressed concerns that the ongoing rally in the S&P 500 might not fully account for potential negative implications stemming from tariffs, as reported by Yahoo! Finance.
In a recent investor update, EY’s top economist, Gregory Daco, predicts that tariffs could increase prices and potentially diminish household demand. Furthermore, he anticipates that the U.S. economy may decelerate significantly in the last quarter of 2025, nearing what is known as “stall speed,” with an estimated annual GDP growth rate of only 0.6% compared to the previous year.
The stock market has shown excessive enthusiasm, disregarding the ongoing economic strain caused by high tariffs.
As of Friday’s close, the S&P 500 is trading at 5,802 points.
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2025-05-25 15:44