Get the Latest Euro Stoxx 50 Index Updates & Market Analysis

Instrument description

The Eurozone is a monetary union where 19 out of 27 member states of the European Union (E.U) have made the Euro as the official currency. Some of the popular countries in the Eurozone include Germany, France, Belgium, Italy, Ireland, Spain, Netherlands, Portugal, and Greece. The benchmark or measure of economic growth in the Eurozone is the ‘Euro Stoxx 50 Index’, also sometimes referred to as the Dow Jones Euro Stoxx 50.

The Euro Stoxx Index represents 50 of the largest blue-chip companies located and functioning in the Eurozone region. The Euro Stoxx Index is said to include stocks from 11 countries of the Eurozone that includes Germany, Belgium, France, Italy, Austria, Ireland, Spain, Netherlands, Portugal, Finland, and Luxemburg. The symbol of the Euro Stoxx Index on the index market is given by SX5E. The Euro Stoxx 50 Index represents almost 60% of the Euro Stoxx Index

History of Euro Stoxx 50 Index

The Euro Stoxx 50 Index includes highly liquid stocks and is a market capitalization-weighted index. The Euro Stoxx 50 Index is licensed and managed since 1998 by Stoxx Limited, which is a joint venture between Deutsche Borse, Dow Jones, and SWX Group. Today, Stoxx Limited has become a globally integrated index that offers stock investments all over the world. In the initial stage, the focus was European stocks, but today it has broadened the scope and include indices from other global countries of the world.

As the Euro Stoxx 50 Index is owned by Deutsche Borse, Dow Jones, and SWX Group, it makes it a popular choice for short term traders and long term investors. The Euro Stoxx 50 Index is reviewed every year in September, and components are added and removed according to market capitalization and economic health. The Euro Stoxx 50 Index now offers investments in indices from every region and country. The type of assets to invest include currency, stock, and fixed income. The investment options are also provided according to strategy, sector, and theme.

The membership in the Euro Stoxx 50 Index is only given to companies of the Eurozone that have adopted Euro as the official currency, which means after the U.K. leaving the E.U, there are no U.K. companies in the prestigious list of 50 companies in the Euro Stoxx 50 Index. The arrangement of companies in the Euro Stoxx 50 Index fluctuates and depends on the market capitalization of the companies. The companies that struggle financially, lose value in the share price, and not accurately depict the economy are usually removed from the list.

The 50 companies that feature in the Euro Stoxx Index function in numerous segments of the market such as banking, chemicals, oil and gas, industrial goods, insurance, health care, and technology. Some of the famous companies in the Euro Stoxx 50 Index include Allianz, Airbus, Unilever, Daimler, Orange, Sanofi, BMW, SAP, BNP Paribas, Adidas, Total, and Siemens. The Euro Stoxx 50 Index saw significant Bearish trends during the European crisis in 2008, but it also showed the volatility of the index which the traders can use to speculate and magnify their profits. The Euro Stoxx 50 reached a record high of 5464.43 on March 6, 2000, due to the Dotcom boom.

How the value of Euro Stoxx 50 is calculated

The Euro Stoxx 50 Index displays the largest blue-chip companies that operate in the Eurozone, and these companies have the highest market value per share. All the 50 companies have a strong financial base, healthy earnings, usually perform well on the stock market, and often deliver high returns to the investors who trade the shares of the companies.

The Euro Stoxx 50 Index is a market capitalization-weighted index where the companies are weighted based on their total market value, which is calculated by multiplying the share price with the number of outstanding shares of the company. The market cap of the Euro Stoxx 50 Index is said to be nearly €2 Trillion. As Euro Stoxx 50 Index is a market-cap index, it means that the companies with larger market cap have a more significant influence on the overall value of the index.

How to read the price change in Euro Stoxx 50

The Euro Stoxx 50 Index is a volatile market that appeals to short term traders who can predict the price movements and market direction, and increase their chance of the possibility to potentially profit. The Euro Stoxx 50 Index indicates the economic health of the European region, and it gives access to online traders and investors from all over the world to invest and diversify their portfolio.

When we see the chart of the Euro Stoxx 50 Index, we notice an upward and Bullish trend from July 2019 to February 2020, and the Index value traded between ranges of 3200.0 to 3800.0. The Euro Stoxx 50 Index reached the highest value of 3870.2 on February 19, 2020. But there is a significant downward and Bearish trend in the last week of February, and the Euro Stoxx 50 Index reached the lowest value of 2374.7 on March 18, 2020. The Euro Stoxx 50 Index is starting to move in an upward direction, but there is still noticeable fluctuations, and the index last traded at 3320.1 EUR. The Bid price is 3306, while the Ask price is 3301.

How to trade in Euro Stoxx 50

The Euro Stoxx 50 Index is available for traders and investors to trade in all the major currencies that includes (USD, EUR, GBP, and JPY) and various return combinations (Net Return, and Gross Return). The trading hours are 9:00 to 18:00 (CET). The global traders and investors wanting to invest or trade stocks in Euro Stoxx 50 Index can do so through Exchange Traded Funds (ETFs) and Contract for Difference (CFDs).

Among other ways to invest in the Euro Stoxx 50 Index the most popular ways are through ETFs and CFDs. The Exchange Traded Funds (ETFs) can easily be bought and sold on the stock market. The best thing about trading ETFs is that there is little to no commission.

Apart from ETFs, Contract for Difference (CFD)s is another popular way to invest in an index market. CFD is a contract that allows you to use leverage and speculate on the underlying asset without having to own the asset. With CFDs, you can also trade in both directions, which is going long (Buy) or going short (Sell). For example, if you think the value of the Euro Stoxx 50 Index will rise, you will Buy (Go Long), and similarly, if you think the value of Euro Stoxx 50 Index will fall, then you will Sell (Go Short). There is an equal chance of magnifying your gains and suffering considerable losses, so a risk management tool may be used to try to minimize the losses.

What causes the price change of Euro Stoxx 50?

The key factors that drive and influence the Euro Stoxx 50 Index are trade agreements, economic shifts, changes in taxation regulations, and sudden shifts in the share price of the major companies on the index. The banks make a major part of the Euro Stoxx 50 Index; therefore, the value of currencies has a bigger impact on the overall performance of the index.

France and Germany have a bigger market share and influence the dynamics of the Euro Stoxx 50 Index. According to statistics, French companies contribute to more than 35% of the index market cap, while German companies account for 33% of the index market cap. The regional political and financial events also play a vital part in determining the direction of the Euro Stoxx 50 Index. For example, the decision of the U.K. to leave the E.U was a major event. The interest rates, increasing debts, inflation, and unemployment rates also affect the value of the Euro Stoxx 50 Index. The information above is for education purposes only and cannot be considered as investment advice. Past performance is not reliable indicator of future results.