2026 Market View: European Equities

Dec 04, 2025

David Lambert, Senior Portfolio Manager & Head of RBC European Equity, summarises the market in 2025 for the asset class, and gives his thoughts for 2026.

  • European equities performed positively over the course of 2025, with strong gains in Spain and Italy, driven by Germany’s fiscal stimulus plan boosting domestic stocks in Q1.
  • What we haven't seen consistently in Europe over the last number of years is earnings growth. However, with the German fiscal stimulus plan on infrastructure and defence starting to come through, we expect this to have a positive impact on domestic earnings growth within Europe itself.
  • European banks are still the largest sector in Europe, and offer attractive valuations, strong shareholder distributions, and benefit from emerging loan growth.
  • Current valuations imply minimal long-term growth expectations (0-1%), so even modest earnings improvements could significantly lift returns.


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