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Citi raises Stoxx 600 price target on expectations of rate cuts and weaker USD

Published 22/03/2024, 12:24
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Citi strategists have increased their end-2024 price target for the Stoxx 600 to 540, up from 510, implying approximately 6% upside from current levels.

The adjustment takes into account Citi's enhanced GDP projections, leading to an expectation of a 6% growth in European earnings per share (EPS), compared to the earlier forecast of 3%.

“Our year-end target assumes no further multiple expansion from current levels, which could still be too conservative,” strategists said.

They attributed the year-end price hike to increased confidence in impending rate cuts, year-to-date global growth upgrades by Citi economists, and the anticipated weakening of the USD going forward.

Although macroeconomic risks have become more evenly balanced recently, they are still considered to be more likely to trend upwards, strategists said.

“We remain skeptical of a full-on rotation from Growth to Value but broader Cyclical outperformance appears more plausible. Our preferred broadening trade is European Small/Mid-Caps,” they wrote.

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