What is the Euro STOXX 50 Index
The EURO STOXX 50 stock market index represents 50 of the largest blue-chip European companies actively operating within the Eurozone, by market cap. The index covers these highly liquid stocks from 11 Eurozone countries, namely Austria, Belgium, Ireland, Italy, The Netherlands, Luxemburg, Spain, Portugal and Finland, with France and Germany as their main contributers.
The EuroStoxx 50 is managed and licensed by STOXX Limited, which is a joint venture of the Deutsche Boerse AG (which issues the DAX 30 index), Dow Jones & Company, and the SWX Group. Stoxx Ltd. is a globally integrated index provider that denotes equity market investments worldwide.
In order to be included in the Euro STOXX 50 index, the country where the company’s headquarters are located must be a Eurozone member country.
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A Brief History of Euro STOXX 50
STOXX Limited is owned by the Deutsche Borse AG (group) and since 1998 has been managing and licensing indices. Initially, when it was launched, the company focused mainly on European stocks. Today, however, its offerings have been substantially broadened and include indices from nearly every country in the world.
The Euro Stoxx 50 index is reviewed annually in September and assessed for any index component changes. The Eurozone’s largest 50 stocks that form the Euro STOXX 50 Index are automatically chosen from the Euro STOXX Index by market capitalization.
The fact that the EURO STOXX 50 is owned by the Deutsche Borse, Dow Jones and SWX Group makes it a popular choice among speculative traders and investors. They are mostly interested in the index’s developments and view this as a marker of Europe’s economic health.
The top ten components as of January 8, 2018 in the Euro STOXX 50 include:
|Name of Company||Industry||Weight (%)|
|TOTAL||Oil & Gas||4.88|
|SIEMENS||Industrial Goods & Services||3.99|
|UNILEVER||Personal & Household Goods||3.13|
Factors influencing the Euro STOXX 50 index price
The key factors that create price movements in the Euro STOXX 50 price are country-wide or sectorial economic shifts, trade agreements/embargo, industry-specific taxation or legislation changes, and significant shifts in share prices of one or several of the major constituents.
A significant part of the EURO STOXX 50 index composition is the banking sector. Therefore, currency markets have a particularly high influence on the index’s performance, as opposed to broader market indices like the S&P 500.
The second most influential sector is Industrial Goods and Services with 10.7% of the index weight.
The two countries having the most impact on the index price dynamics are France, with 36.65% of the index market cap belonging to French companies, and Germany with 33.3%.
The events that shake the stock market and influence index price dynamics are political events such as Brexit (UK leaving Eurozone), local elections, EU legislation issues, etc. These should be watched closely in index CFD trading.
During the financial crisis that ripped through European markets in 2007, the index was also impacted by the news and fears of increased debts that were inflicting the Eurozone. There was also December 2013’s high unemployment rate of 25%.
With the EURO STOXX 50 being affected by European news, it can be a volatile instrument and provides some exciting opportunities to traders.
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What makes Euro STOXX 50 an attractive trading instrument
This index is one of Europe’s major stock market indices and extremely popular among traders. The anticipation of future movements of the index itself is necessary to consider, as well as taking into account all news and movements relative to the Eurozone and Europe.
All of the above are clear indications of the stock price and its overall performance, allowing traders to gauge their exposure versus the instrument’s volatility.
Online traders see the Euro Stoxx 50 as a great opportunity to trade the instability of Eurozone markets. Many of the companies are from a specific industry and, by staying on top of these industries, one can benefit and trade better overall with the EURO STOXX 50.
Euro STOXX 50 Trading information
- MT4 Symbol: DJ_EURO50
- Trading Time: 07:00-20:59
- Country: Eurozone
- Currency: EUR
- Exchange: EUREX
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