Deutsche Bank apparently believes Europe’s 15-year underperformance against the US may be coming to an end and upgraded European stocks to “overweight”.
• Deutsche Bank raised its stance on European stocks relative to US stocks
• Favorable valuation in Europe opens up opportunities
• Cryptocurrencies could also benefit from reallocations
For a long time, European stock markets lagged behind Wall Street. But as Reuters reports, Deutsche Bank has made a significant change to its market outlook, upgrading its view on European stocks compared to their US counterparts from initially “neutral” to now “overweight”.
The European brokerage firm assumes that the STOXX 600 index could reach the 650 point mark by the end of 2026 (as of October 31, 2025: 571.89 points). “Fundamental changes in valuations, leverage, market concentration and even risk profiles are paving the way for a potential revival in the attractiveness of European equities,” the major German bank’s analysts are quoted as saying.
European stocks are cheaply valued
The analysts point to the high valuation levels of the US stock markets – fueled by the AI hype and in hopes of looser monetary policy. Against this background, investors’ concerns about a market bubble are increasing. In this regard, Deutsche Bank does not fear a downturn in US stocks, but points to increasing concentration risks given the dominance of the so-called “Magnificent Seven”.
In view of this, investors could increasingly turn to stocks from the rest of the world, say analysts. In this case, Europe could be an attractive option given its historically moderate valuations and expectations of higher household spending in Germany.
“Regionally, we are positive for both regions, but expect the 15-year underperformance of European stocks compared to US stocks to come to an end,” argue Deutsche Bank analysts.
Consequences for the crypto market
According to “Blockchain News”, this development could also have an impact on Bitcoin and Co. because important cryptocurrencies often correlate with the stock markets in risky times. If European markets recover, this could increase investors’ appetite for risk in general and therefore interest in cryptocurrencies.
In addition, institutional flows are a central element. If large banks and hedge funds increasingly invest in European assets, this could indirectly benefit cryptocurrencies through diversified portfolios because this rotation also frees up capital for risky assets such as BTC and altcoins.
Editorial team finanzen.net
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