Bank of America Strategist Warns of 10%+ European Stock Slump

Bank of America strategists led by Sebastian Raedler predict European stocks to slump more than 10% in the coming months due to underestimation of the threat of a weaker economy. They expect the Stoxx 600 to slide to 490 points by Q1 2026, a 14% drop from current levels. Raedler has been cautioning against a slowdown in global economic growth hurting European equities and has a year-end 2025 target of 520 points, below the average in a Bloomberg survey.

In a recent analysis, Bank of America strategists led by Sebastian Raedler have predicted a significant decline in European stocks over the coming months. The team expects the Stoxx 600 to fall to 490 points by the first quarter of 2026, representing a 14% drop from current levels BofA’s Raedler Sees European Stocks Slumping More Than 10%^[2].

Raedler has been a cautious voice on European equities, repeatedly warning about the potential slowdown in global economic growth and its impact on European stocks. His year-end 2025 target for the Stoxx 600 is 520 points, which is below the average of 560 points predicted by a Bloomberg survey of 19 strategists BofA’s Raedler Sees European Stocks Slumping More Than 10%^[2].

The market's current enthusiasm around artificial intelligence (AI) has led to record highs in European stocks, but the benchmark is trailing the S&P 500. The Bank of America team believes that investors are underestimating the threat of a weaker economy, leading to an underpricing of risk BofA’s Raedler Sees European Stocks Slumping More Than 10%^[2].

This forecast comes amid mixed economic data from Europe. While European stock markets closed higher on Monday, with the Stoxx Europe 600 rising 0.34%, the Spanish inflation rate rose to 2.9% in September, which was slightly above expectations European Equities Close Higher in Monday Trading; Spanish Inflation Rises Slower Than Expected^[3].

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