Europe Equity Market Outlook: Q3 2026
How will the US-Iran peace deal impact European equity valuations and sector performance?
The preliminary US-Iran peace agreement has materially reduced the geopolitical risk premium embedded in oil prices, pulling Brent back toward the $65/bbl midcycle assumption. This shift has broad implications across the European equity landscape. Energy sector valuations now look fair after a volatile quarter, while sectors like Technology (+39.4% in Q2) and Financial Services (+19.2%) have surged on improving macro visibility.
Undervalued opportunities will be harder to spot, but they still exist. Most stock sectors still hold hidden gems trading at 4 or 5 stars, and small cap stocks across the board offer great upside for long-term strategies.
Morningstar’s Q3 2026 report analyses the European equity markets by equity style box, global equity performance, sector valuations, and more. As investors embark further into 2026, it's more important than ever to find investments that account for risk and diversify your portfolio for the better.
Access the full report to discover which stocks are right for your investment goals in 2026.
