HSBC Turns More Bullish on European Stocks, Lifts STOXX 600 Target

TLDR

• HSBC raised its 2026 STOXX 600 target to 680 from 670.
• The new target implies roughly 6% to 7% upside from current levels.
• HSBC sees the index reaching 760 by the end of 2027, about 20% higher.
• The bank expects European earnings growth above 15% in both 2026 and 2027.
• HSBC upgraded Italy to overweight while cutting France to underweight.

HSBC has raised its year-end target for Europe’s STOXX 600 for the first time in 2026, citing stronger corporate earnings, improving business sentiment and a healthier economic outlook.

HSBC raises 2026 year-end Stoxx 600 index target to 680 from 670

— FinancialJuice (@financialjuice) September 23, 2026

The bank now expects the benchmark index to reach 680 by the end of 2026, up from its previous target of 670. That implies roughly 6.3% upside from current levels, according to Reuters, while HSBC sees the index reaching 760 by the end of 2027.

European Earnings Outlook Improves

HSBC forecasts European earnings growth of 15.6% in 2026 and 15.4% in 2027. Its revised market framework reflects changes in earnings-per-share expectations, GDP forecasts, business confidence and valuations.

The bank also highlighted a shift in where European companies generate their revenue. Domestic revenue exposure has risen to 51.2%, its highest level since 2017, although about 49% of sales still come from overseas markets.

That leaves corporate earnings sensitive to currency moves. HSBC estimates that a 5% fall in European currencies against the U.S. dollar could add around 3.1 percentage points to regional EPS growth in 2026.

Recent market performance has also improved sentiment toward European equities. The STOXX 600 rose 1% on Monday as technology and banking shares advanced, while lower oil prices helped ease concerns over inflation and energy costs.

HSBC Favors Italy Over France

HSBC kept its overall sector allocations unchanged but upgraded Italy to overweight from neutral. The bank cited stronger GDP expectations, improving earnings momentum and lower reliance on Middle Eastern gas and LNG.

France was downgraded to underweight because of weaker economic forecasts, softer analyst expectations and continued pressure on consumer discretionary companies.

HSBC is also constructive on UK mid-cap stocks. The FTSE 250 remains around 25% below its 10-year average on a forward price-to-book basis, despite its recent rebound.

The bank expects FTSE 250 earnings to grow 14% in 2027, compared with 5% for the FTSE 100, helped by greater exposure to the improving domestic UK economy. HSBC also lifted its FTSE 100 year-end target to 11,390 from 10,980.

HSBC’s targets remain forecasts rather than guarantees, with European markets still exposed to currency shifts, energy prices, geopolitical risks and changes in economic growth.