Could peace in the Middle East reverse Europe’s underperformance? in Stock News 11/05/2026 Bank of America (BofA) Global Research has maintained an underweight rating on European equities relative to global benchmarks, suggesting that even a potential resolution to the Iran war may not be sufficient to reverse the region’s current macroeconomic deterioration. According to a BofA European Equity Strategy report released on May 8, 2026, the continent’s heavy reliance on energy imports left it uniquely exposed to the conflict, resulting in a 7% underperformance against global peers since the war began. While hopes for a renewed U.S.-Iran peace deal have recently surfaced, BofA strategists stated, “We doubt that even a swift end to the Iran war would reverse the key drivers of Europe’s underperformance”. The report indicates that even in a best-case resolution by the end of May, Brent oil is expected to remain around $100/bbl throughout the second and third quarters of the year. Furthermore, European natural gas prices could potentially jump above €80/MWh due to significant supply damage and the urgent need for inventory rebuilding. Such conditions are projected to lower Euro area final private domestic demand growth to almost -1% on a quarterly annualized basis. The report further notes that the energy pressures would imply a 2-3 point decline in the Euro area PMI to 45. BofA also highlighted deteriorating credit conditions as a significant headwind, noting they imply the “biggest growth headwind from the credit cycle since 2022”. Energy pressure is expected to be reinforced by a projected 50bps rate hike from the European Central Bank over the summer. With European equities currently priced for a more optimistic growth trajectory, BofA warns that the market is likely to get jittery as more signs of growth deterioration emerge. Under these macro projections, the analysts see approximately 15% downside for European equities. Source: Investing.com 2026-05-11 hellenicship