Goldman Sachs say a difficult macroeconomic environment in Europe may continue to put pressure on assets, even despite a positive risk/reward ratio, financial support and measures to reduce energy demand. They remarked that they remain wary due to the energy crisis, monetary tightening and the political backdrop around Italy's elections, and only signs of an "imminent market downturn" could change their view.

"Our economists expect the energy crisis to push both Europe and the UK into recession, albeit relatively mild, and forecast an acceleration in policy tightening by both the ECB and the Bank of England," Goldman Sachs strategists wrote.

The technical picture also points to at least another wave of decline in European indices, which should lead to an update of the yearly lows.

European equities have lagged the S&P 500 this year in dollar terms as euro weakened more than 10%. Meanwhile, the region's credit markets continue to be much more stressed than stocks.

On the bright side, Europe's 12-month earnings projections are yet to see any major downsides. Although the region's income-based estimates have fallen this year, they still remain above levels reached during the 2008 financial crisis.