Fastest Gain Since 2011 Takes Europe Stocks To Strategist Limit
Equities in the region rose more than 8 percent since a July low through Tuesday, including the longest streak of gains in 15 months. The increase left the Stoxx Europe 600 Index 4.8 percent away from the average year-end forecast of 10 banks tracked by Bloomberg. The benchmark gauge dropped 0.6 percent at the close of trading.
While European stocks almost entered a correction earlier this month amid anxiety over Greece, they rebounded as those worries faded and investors bullish on the region?s economic and earnings outlook piled back in. The Stoxx 600, 2.8 percent from its April record on Tuesday, already reflects most of the optimism, according to Dirk Thiels at KBC Asset Management.
?A very good earnings season could push us a little higher, but I?m sure most of us would be pretty happy to end the year at these levels,? said Thiels, KBC?s head of investment management in Brussels. ?We could have added to our positions when the market corrected but we missed the boat and stocks are not cheap anymore.?
The Stoxx 600 climbed 18 percent this year through Tuesday, taking its valuation to 16.9 times the projected earnings of its members, up from 15.7 times on July 7. While gains earlier this year saw strategists scrambling to catch up, they have stuck to their guns this time around. A fifth of the forecasters now call for a drop from current levels, while Citigroup Inc., which had predicted the biggest annual rally a month ago, has moderated its estimate.