European Stocks to Surge in 2021 – Vaccine Rollout and Economic Recovery Hopes
Arslan Butt • 1 min read
A recent Reuters poll reveals that European stocks could soar to record highs in 2021 amid growing optimism around vaccines against COVID-19 and the resulting impact on business confidence and profitability. Fund managers polled by Reuters forecast that STOXX 600 could soar to 430 points by the end of next year as economic activity rebounds after the rollout of the vaccines.
This reading would be 60% higher than the low of 268 European stocks hit back in March this year at the beginning of the pandemic and resultant lockdowns. The recent shift to a positive mood in the markets was triggered by promising announcements by three pharmaceutical companies about highly effective vaccines against COVID-19.
However, European equity markets could face downside risks due to the the possibility of more lockdowns being imposed across the region. Stocks could also turn bearish in case the EU and Britain are unable to work out a post-Brexit trade deal or if the EU is unable to offer enough stimulus and support to offset the damage caused to the Eurozone economy by the pandemic.
Despite these risks, the overall mood in stock markets remains optimistic on account of the vaccines and their possible rollout by as soon as the end of this year. So far this month, European equities have gained around 14%, marking the best performance on record, even though worries about the second wave underway persist.