US-Iran follow-up talks called off, clouding outlook for European stocks

Switzerland said U.S.-Iran follow-up talks scheduled for Friday were canceled after VP JD Vance dropped plans to travel there, per Reuters.reuters
Barclays ↘0.08%, Goldman Sachs ↘0.23%, and Société Générale had all raised STOXX 600 year-end targets after the preliminary deal boosted markets.bitget
The STOXX 600 hit record highs last week on peace optimism, but the collapsed talks now threaten the bullish outlook underpinning those upgraded forecasts.reuters

Goldman Sachs and Barclays Raise European Stock Targets After US-Iran Deal

The preliminary peace agreement between the United States and Iran has reshaped the outlook for European equities, prompting Wall Street strategists to raise their year-end targets for the STOXX Europe 600 index as geopolitical risk recedes and oil prices fall.

Strategists Turn Bullish

Barclays raised its year-end target for the STOXX 600 to 670 from 620 on Tuesday, dropping its bearish stance on European stocks and citing lower oil prices and the improved economic outlook from the US-Iran agreement. Goldman Sachs had already lifted its 12-month target to 660 in early June, pointing to resilient corporate earnings growth and support from artificial intelligence-related investments. Societe Generale has also revised its forecasts upward, according to a Bloomberg survey.bitget

The latest Bloomberg poll of 16 strategists now shows an average year-end expectation of 640 points for the STOXX 600, matching its recent all-time high — a sharp improvement from a May survey that projected just 624 points amid warnings about the war’s economic toll.bloomberg

The Iran Deal’s Market Impact

European stocks surged to record highs on June 15 after the US and Iran announced a preliminary agreement to end their three-month conflict, reopen the Strait of Hormuz, and lift the American naval blockade. The STOXX 600 touched 640 points that day, surpassing its previous peak from late February.reuters

President Donald Trump signed the agreement at the Palace of Versailles on June 17 during a dinner hosted by French President Emmanuel Macron, and Iranian President Masoud Pezeshkian also endorsed the document. The deal triggered a drop in oil prices, reducing inflationary pressure and easing expectations for further interest rate hikes from the European Central Bank.tradingeconomics

Uncertainty Remains

Despite the rally, questions linger. Reuters reported on Friday that follow-up talks in Switzerland had been called off, with Vice President JD Vance dropping plans to travel to the country. The STOXX 600 logged five consecutive days of gains through Wednesday, closing at 639 points, though it continues to trail the S&P 500 for the year.reuters

Barclays’s new target of 670 implies roughly 5% upside from current levels, while Goldman’s 12-month projection of 660 suggests more moderate gains ahead. Whether those targets prove achievable may depend on whether the peace framework translates into a lasting resolution — or dissolves into renewed uncertainty.reuters