BlackRock’s Jewell Says Strong Earnings to Boost European Stocks

1w]5i8vr0nrkah7dp}5{p(0s_media_dl_1.png Bloomberg Intelligence

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(Bloomberg) — Europe’s record-breaking equity rally is far from over given a solid outlook for corporate earnings, according to BlackRock Inc.’s Helen Jewell.

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Regional stocks are expected to advance another 8% to 9% this year on a boost from banks and sectors exposed to the artificial intelligence trade, said Jewell, who is international chief investment officer for fundamental equities at the firm. 

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“Stocks absolutely have the scope to rally further if companies deliver on earnings this season even with elevated valuations,” Jewell said in an interview. “The main earnings optimism is still coming from AI and the next derivatives of this trade — that’s energy efficiency and sustainable energy.”

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Analysts expect Stoxx 600 profits to rise about 11% this year after zero growth in 2025, according to data compiled by Bloomberg Intelligence. The benchmark is scaling records after a 17% rally last year, driven by investor confidence about potential fiscal stimulus and economic growth.

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Jewell got the direction of European equities right before, correctly predicting further gains in the absence of a trade shock last July. The Stoxx 600 has rallied 12% since her call.

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Her optimism contrasts with jitters around the European stock rally potentially running too hot. The benchmark’s strong January start propelled its relative strength index above 80, making it the most overbought in a decade. A reading above 70 is generally considered a precursor to a pullback.

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That could pose a problem for stocks if the economic outlook were to deteriorate significantly, Jewell said. “If inflation proves to be sticky, or economic growth slows meaningfully, that would put the equity market’s trajectory at risk.”

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But for now, she expects more earnings strength in banks, Europe’s best-performing sector last year. 

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“In Europe, there’s a sweet spot for inflation, interest rates and economic growth,” Jewell said. “They’re all at sustainable levels and that’s supporting loan growth at banks. And while the sector is not as cheap as it was a year ago, it’s still compelling based on its long-term history.”

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