Europe's time to shine?

Equity strategists are slowly starting to feel positive about European stocks again, given improving earnings performance and a better macro backdrop.

Last week Goldman Sachs lifted its target for the STOXX 600, while UBS and Barclays also sounded optimistic.

Second quarter earnings are expected to have increased 23.4% from Q2 2026, according to data from LSEG I/B/E/S. Consensus now expects full-year earnings growth of almost 18%.

"Commodities have been a big contributor, but this recovery is broader than the sector itself," Goldman noted.

In fact, when you exclude the energy sector, earnings are still expected to have grown over 12% in the second quarter.

Goldman's view is one shared by UBS strategists, who also noted a broader recovery in earnings.

"The market is no longer reliant on a narrow group of AI enablers or banks," said UBS.

"Upward earnings revisions are broadening across multiple sectors and industry groups, creating a healthier and more durable backdrop for performance."

Barclays is also optimistic for the region, but flags Friday's PMIs and Wednesday's inflation data as key inputs to watch.

"For now, the setup remains constructive though, as stagflationary pressures appear contained, earnings momentum is improving, and both positioning and valuations remain less demanding versus global peers, thus improving the region's attractiveness," wrote Barclays on Friday.