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 has turned "overweight" on European equities, the brokerage said on Tuesday, as a boost from lower interest rates and expectations of a strong corporate earnings season amid an improving political outlook were expected to bolster stocks.

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.