© Reuters. FILE PHOTO: The logo for Citibank is seen on the trading floor at the New York Stock Exchange (NYSE) in Manhattan, New York City, U.S., August 3, 2021. REUTERS/Andrew Kelly/File Photo
(Reuters) – Citigroup raised its 2024 year-end target for the index by about 6% to 540 from 510, citing more clarity on the Federal Reserve’s interest rate trajectory and potential weakness in the U.S. dollar.
The brokerage’s target for the pan-European benchmark index also implied a nearly 6% upside to its Thursday close.
“European equities tend to trade higher around rate cutting cycles,” the Wall Street brokerage said in the note dated Thursday.
“This week’s Fed meeting reduces some higher-for-longer risks, with cuts appearing firmly on the table,” Citi added.
The Fed on Wednesday left interest rates unchanged and stuck to its view of three interest rate cuts this year.
Citi also lifted its 2024 forecast for the earnings-per-share of European stocks to 6% from the previous 3%, on the back of likely improvement in global economic growth.
The brokerage sees weakness in the U.S. dollar in the second quarter of 2024. “A weaker dollar should be supportive of European and ex-US equities,” it added.
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