Finance
Citigroup sets 2026-end STOXX 600 target at 640 on fiscal tailwinds
Published by Global Banking and Finance Review
Posted on December 8, 2025
2 min readLast updated: January 20, 2026
Global Banking and Finance Review
Company
Published by Global Banking and Finance Review
Posted on December 8, 2025
2 min readLast updated: January 20, 2026
Citigroup forecasts the STOXX 600 index to hit 640 by 2026, driven by fiscal spending and monetary policy. The brokerage sees a 10.5% upside and expects over 8% EPS growth next year.
Dec 5 (Reuters) - Citigroup on Friday set its 2026 year-end target for the STOXX 600 index at 640, broadly driven by fiscal spending and supportive monetary policy.
The Wall Street brokerage's target implies a 10.5% upside to the pan-European index's last close on Thursday.
The benchmark has risen 14% this year, thanks to Germany's fiscal spending plans and interest rate cuts by the European Central Bank, but still trails behind the S&P 500 index's about 16.6% gain.
"We remain constructive on European equities. It should be supported by fiscal spend and lagged impacts of monetary easing," Citigroup analysts said in a note.
The brokerage expects the earnings-per-share (EPS) growth to improve after a flat 2025 due to tariffs and forex headwinds.
"Both headwinds are easing," Citi said as it forecast a more than 8% EPS growth for next year.
Citi said it has a "tilt" towards cyclical sectors, including banks, travel and leisure, basic resources and industrials.
It upgraded both basic resources and industrials to "overweight" from "neutral", and downgraded the European tech sector to "neutral" from "overweight", citing valuations.
(Reporting by Rashika Singh in Bengaluru; Editing by Mrigank Dhaniwala and Subhranshu Sahu)
The STOXX 600 index is a stock market index that represents 600 of the largest companies across 17 European countries, providing a broad measure of the European equity market.
Earnings-per-share (EPS) is a financial metric that indicates a company's profitability by dividing its net income by the number of outstanding shares.
Monetary policy is the process by which a central bank manages the money supply and interest rates to influence economic activity and control inflation.
Cyclical sectors are industries whose performance is closely tied to the economic cycle, typically thriving during periods of economic expansion and contracting during recessions.
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