PARIS (Reuters) - European shares are set to bounce back in 2015 after a roller-coaster ride this quarter, helped by the European Central Bank’s ultra-loose policy and as a weaker euro and lower oil prices lift earnings, a Reuters poll forecasts.
However, the economic crisis hitting trade partner Russia - where the rouble has plummeted around 50 percent against the dollar this year and the country is sliding towards recession - is seen as a major risk for European equities next year.
The survey of more than 50 fund managers and strategists conducted in the past week predicted the pan-European STOXX Europe 600 index would rise 13 percent from current levels to 370 points by the end of 2015.
The euro zone’s blue-chip Euro STOXX 50 index, home of bellwethers such as Airbus and Siemens, is expected to rise 14 percent by the end of 2015, reaching 3,467.
European stocks have sharply fallen this month as the relentless drop in oil prices has hurt energy shares and fueled fears of deflation in the euro zone, while the collapse of Russia’s rouble has sparked worries about the country’s economy and the impact on Europe’s recovery.
The STOXX 600 is around where it started this year. In contrast, Wall Street’s S&P index has gained 6.7 percent so far in 2014.
“After a ‘lost’ year in terms of stockmarket performance, we see the Euro STOXX 50 delivering a good showing in 2015, as structural reforms, monetary policy change, investment plans and a weaker currency finally start to pay off,” said Roland Kaloyan, head of European equity strategy, at Societe Generale.
The European Central Bank is seen launching U.S.-style quantitative easing in early 2015 as it steps up its efforts to stave off deflation in the currency bloc, a move seen supporting the equity market.
This year’s drop in the euro versus the dollar and the slump in oil prices are also seen as positive catalysts for European equity markets in 2015.
“The sharp drop in oil prices reinforces the scenario of global growth above 3 percent in 2015 while central banks will continue to flood the market with liquidity: two positive factors for stocks,” said Eric Mijot, head of strategy at Amundi, which has $1.06 trillion in assets under management.
Falling energy prices are set to reduce input costs for companies overall and boost consumer spending. European airlines will benefit the most as jet fuel, derived from crude, accounts for around a third of the sector’s operating costs.
After proving a major headwind for European exporters in the first part of 2014, the euro is now down about 9 percent against the dollar this year and should also help the equity market in 2015, giving a boost of 3 to 6 percent to corporate earnings, analysts and fund managers predict.
However, they warned that while the ECB remains very accommodative, the prospect of an interest rate hike by the U.S. Federal Reserve in 2015 could create turbulence in European stock markets.
The latest Reuters poll sees France’s CAC reaching 4,700 points by end-2015, up almost 15 percent from Tuesday’s close, while Germany’s DAX is seen moving above a record high reached earlier this month to reach 10,800 points by end-2015, up almost 13 percent from Tuesday’s close.
Spain’s IBEX is set to reach 11,471 points by the end of next year, while Italy’s MIB is seen climbing to 21,500 points, with the two benchmark indexes respectively up 14 percent and 15 percent from Tuesday’s close.
Polling by Blaise Robinson and Alexandre Boksenbaum-Granier in Paris, Sudip Kar-Gupta in London and Elisa Anzolin in Milan; Editing by Susan Fenton