European stock market gains have broken through a key psychological barrier this month and show no signs of stopping. The Stoxx Europe 600 hit 500 points for the first time last week, after which the benchmark hit another record high. These records come alongside seven consecutive weeks of positive returns. However, if history is any guide, investors need not be nervous about the market’s excitement. Stocks are likely to see bigger gains in the future, according to a CNBC Pro analysis of stock market data going back to 1987. .STOXX 1Y Mountain The index has posted seven-week gains 50 times in the past 37 years, excluding the current advance. Among them, in the week after the continuous rise, the stock market rose 30 times (accounting for 60%), with an average increase of 1.23%. Of course, past performance cannot be the sole factor in determining future compensation. Following seven consecutive weeks of gains, the likelihood of a positive return is generally greater in one month, with stocks rising 32 times for an average gain of 2.7%. When stocks fall immediately after seven straight weeks of gains, the average decline is 1.17%. One month later, if the stock market loses momentum, the average loss is 1.96%. The Stoxx Europe 600 recorded its longest winning streak between June and August 1993, when the market rose for 12 consecutive weeks. What does Wall Street think? Analysts’ weighted average price targets for companies in the Stoxx Europe 600 index indicate a 9.1% upside potential for the index, according to FactSet data. However, some equity strategists have warned that European economic growth is expected to slow, leading to possible earnings per share (EPS) forecasts for major companies being revised downwards. Sebastian Raedler, European equity strategist at Bank of America, said: “Our macro forecast is consistent with the Stoxx 600 falling about 15% in the fourth quarter and a 15% underperformance of European cyclical stocks relative to defensive stocks.” Barclays Bank strategists believe stocks will move higher this year. “We expect equities to be higher but more sober in 2024,” Barclays strategists led by Emmanuel Cau said in a note to clients on January 31. Rate cuts remain controversial, but we think a soft landing remains a possibility situation, which should ultimately help stocks move higher. ” The bank set the year-end target price of the Stoxx Europe 600 Index at 510 points.
