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European share gains to be kept in check by Trump tariffs- Reuters poll
Published by Global Banking and Finance Review
Posted on August 20, 2025
4 min readLast updated: January 22, 2026
Global Banking and Finance Review
Company
Published by Global Banking and Finance Review
Posted on August 20, 2025
4 min readLast updated: January 22, 2026
European shares may see limited gains due to US tariffs, despite support from fiscal policies, according to a Reuters poll.
By Samuel Indyk and Danilo Masoni
LONDON (Reuters) -European shares are expected to close the year a touch higher than where they are currently trading, a Reuters poll found, as support from looser fiscal and monetary policy will be kept in check by uncertainties over Washington's import tariffs.
The pan-European STOXX 600 index is expected to rise slightly to 570 points, the median result from a survey of equity strategists and analysts found, implying about 3% upside from its closing price of 554 on Monday.
The Euro STOXX 50 of the largest 50 companies in the euro zone is expected to end the year at 5,550 points, up 2% from Monday's close.
U.S. President Donald Trump upended global markets in April when he imposed tariffs on imports from trading partners including the European Union and Britain.
A trade deal between the EU and U.S. averted the worst-case scenario but the imposed 15% levy on most imported goods to the U.S. will still impact corporate profits, particularly for companies with high sales exposure to America.
"The agreed tariffs should come through fully in H2, which will impact earnings," said Michael Field, chief equity strategist at Morningstar.
"I don't believe this will be devastating though, as lots of industries have already adapted their distribution chains and customer bases accordingly."
European companies just about weathered increased U.S. import tariffs in the second quarter, eking out earnings growth for the fifth quarter in a row.
EUROPEAN OUTPERFORMANCE OVER?
European shares were the global bright spot in the early part of the year, outperforming global peers in the first quarter as a massive loosening of fiscal policy by Germany lifted sentiment and boosted expectations for domestic growth.
At the same time, doubts crept in about the capital expenditure plans of U.S. mega-cap technology stocks and whether the artificial intelligence boom would continue to drive earnings growth.
But those worries proved misplaced, at least in the near-term, with Microsoft, Meta Platforms and Alphabet among companies taking part in the massive data-centre buildout, with capital spending to reach $330 billion this year.
Meanwhile, European economic growth remains tepid and the impact of Germany's plans to increase spending is expected to take time to filter through.
And while European shares are still up 9% this year, the S&P 500 has caught up, rising almost 10% in 2025. The tech-heavy Nasdaq is up almost 13%.
Deutsche Bank Research's European equity- and cross-asset strategy team said they had expected a short-term outperformance of U.S. stocks after Trump relented on tariffs and that has now largely played out.
"We now see the tactical catch-up to be close to complete and turned tactically neutral in mid July, while keeping a strategic preference for European equities," Deutsche Bank said.
The German bank believes the STOXX 600 will rise to 590 points by the end of the year, the highest forecast of those surveyed.
European shares remain much cheaper than their U.S. counterparts. Trading at 14.3 times 12-month forward earnings, the STOXX 600 is at a 36% discount to the S&P 500, not far off the record 41% reached in November last year.
Barclays equity strategists believe the relative cheapness, lighter positioning and converging growth between the EU and U.S. should start to help European shares over the medium term.
"We expect EU equities to keep grinding higher and reach new highs by year-end, with some broadening into selective cyclical/exporter laggards," Barclays said.
Germany's blue-chip DAX index, which has risen over 22% year-to-date and traded at a record as recently as last month, is expected to gain almost 1% by the end of 2025 to 24,500 points, the survey found.
Gains this year have been powered by defence names such as Rheinmetall, up over 150%, and banks such as Commerzbank and Deutsche Bank, which have risen nearly 135% and 90% respectively.
The strategists surveyed expect Britain's FTSE 100, which has also reached a new peak this month, to add over 2% by the end of the year.
(Reporting by Samuel Indyk and Danilo Masoni; Editing by Jonathan Cable and Sharon Singleton)
The STOXX 600 index is a stock market index that represents 600 companies across 17 European countries, providing a benchmark for European equity performance.
Corporate profit refers to the financial gain a company makes after all expenses, taxes, and costs have been deducted from total revenue.
Equity represents ownership in a company, typically in the form of stocks or shares, and reflects the residual value of assets after liabilities are subtracted.
Economic growth is an increase in the production of goods and services in an economy over time, usually measured by GDP.
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