Goldman Sachs experts said that given the potential improvement in economic growth and interest rate cuts by central banks, they revised their forecast for Europe's STOXX 600 index at the end of this year. Now Goldman Sachs expects the index to reach 540 points, which is 30 points higher than the previous forecast. On Friday, the index ended trading at 509.64 points.
"If GDP growth accelerates slightly and key central banks begin easing monetary policy in June, we may again revise our forecast upward," Goldman Sachs said.
The latest data for the eurozone showed that business activity in the private sector was close to expanding in March (49.9 points compared with 49.2 points in February and forecasts at 49.7 points). Meanwhile, in the United States, business activity in the private sector declined slightly to 52.2 points from 52.5 points in February.
Goldman Sachs also said that over the last six months, European equities climbed 12%, and all of this rally has been driven by an improvement in valuations rather than earnings growth.
Meanwhile, experts warned that higher oil prices could pose a two-way risk to forecasts - while they could push back the timing of interest rate cuts, they also create an "upward risk" to earnings-per-share growth.