There’s never been a bigger valuation gap between European and U.S. stocks, and that’s not the only reason why Deutsche Bank now says it prefers equities on the Continent on a tactical basis.

Deutsche Bank and Citigroup have turned bullish on European equities as lower interest rates, hopes of a strong corporate earnings season and an improving political outlook are expected to bolster sentiment in 2025.

European equities face a much brighter outlook in 2025 amid improving economic prospects and a low bar for corporate earnings after badly lagging US stocks last year, according to strategists at Deutsche Bank AG.