Goldman Sachs lifts 12-month target for European stocks on strong earnings

KUALA LUMPUR, 15 AUGUST 2026 —

Goldman Sachs Raises Europe Stock Target on Earnings Strength

The upgrade implies about 5.5% upside from current levels. Europe is experiencing one of its strongest earnings seasons in years, with soaring energy and materials profits offsetting softer demand in other sectors.

“Europe’s recent relative performance has been stronger than its reputation suggests,” Goldman strategists wrote in a note. They highlighted that European equities remain cheaper than US peers while offering higher shareholder returns through dividends and buybacks.

Aggregate earnings growth for STOXX 600 companies is now projected at 23.4%, based on reported results from 268 firms and estimates for those yet to publish, according to LSEG I/B/E/S data. Despite energy supply concerns, the index has gained 11.3% year-to-date, trailing the S&P 500’s 13.9% rise.

Goldman also raised its 12-month target for Britain’s FTSE 100 to 11,400, an increase of about 5.8% from current levels. However, the bank warned that a prolonged energy shock remains a key risk for Europe, where reliance on imported energy continues to weigh on investor sentiment.

Malaysia Market Impact The upgrade reflects broader optimism in global equities, which could indirectly support Asian markets, including Malaysia, through improved risk appetite. Malaysian investors may see European earnings strength as a positive signal for export-oriented sectors, particularly energy and commodities.

However, Malaysia’s exposure to European demand remains limited compared to Asia’s larger economies. The STOXX 600’s energy-heavy gains may benefit Malaysian oil and gas firms, but direct spillover effects are expected to be modest.

Sector and Company Specifics European energy and materials firms within the STOXX 600 are driving earnings growth, with aggregate gains offsetting weaker demand in other sectors. Goldman’s upgrade suggests continued confidence in these industries, though risks from energy supply disruptions persist.

In contrast, Malaysian equities may see indirect benefits if European economic resilience boosts global trade. However, sector-specific impacts will depend on Malaysia’s trade linkages with Europe, which remain secondary to its trade with China and ASEAN.

Outlook Goldman’s revised targets indicate cautious optimism for European equities, supported by strong earnings but tempered by energy risks. For Malaysia, the outlook depends on broader Asian and global economic conditions rather than direct European exposure.

Investors will monitor European earnings trends and energy market stability, as both factors could influence regional market sentiment in the coming months.