European stock markets are poised to rise another 5% by the end of 2026, driven by strong earnings growth, according to market analysts and recent data [1]. Beata Manthey, speaking in Bloomberg interviews on May 21, said, "We’ve been seeing an explosion of earnings in the last reporting season, so from that perspective I don’t see risks" [1].
Earnings per share (EPS) growth across Europe is increasing at the index level, though the gains are concentrated in a relatively narrow group of stocks. Manthey noted, "EPS growth in Europe for the index-level is going up, not down. But it is happening in this very narrow fashion" [2]. This means while many companies may not be growing significantly, a subset is driving much of the overall index improvement.
The recent selloff in the bond market has raised questions about impacts on equities, but Manthey said it is "not necessarily bad for equities" [2]. The bond moves may reflect changes in interest rate expectations without directly threatening corporate earnings that underpin stock valuations.
The strong performance in earnings amid varied market conditions provides a foundation for stock market gains through the second half of the year. The expected 5% rise reflects optimism that this earnings momentum will continue supporting equity valuations.
Investors will watch upcoming earnings reports and bond market developments closely as key indicators of how the trend evolves. June and July earnings seasons will offer fresh data to confirm or contest the outlook expressed by analysts and observed in recent results [1, 2].
