Bank of America: The fall in the stock market has only just begun

Published 11 August 2024 at 16.02

Economics. European stocks face a potential double-digit decline through early 2025, according to a Bank of America forecast.

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The US bank predicts weaker economic growth and a weakened labor market as the main reasons behind the expected slowdown.

Despite a recent rise, the European stock index Stoxx 600 is still 4.5 percent below its peak from June.

The bank's strategists point out that the risks in the market – reinforced by the latest US jobs figures that showed increased unemployment – may outweigh the potential benefits of lower interest rates.

Bank of America predicts that the Stoxx 600 could fall to 450 points in the first quarter of 2024, a further 10 percent decline from current levels.

Currently the index is traded for 498 points. The bank also warns that the market is overvalued and advises investors to be cautious about buying during downturns.