EUR50

The EURO STOXX50 index is the major stock index of the Eurozone. The index has 50 stocks from 11 European countries. It is the multinational index that host the most liquid stocks of the Eurozone. Thus, it may indelicate development of the Eurozone’s economy. The index was created in 1998 and is calculated by STOXX, an index provider owned by Deutsche Börse group. It has some specific features a trader should keep track of:
- The index is revised every year in September and has stocks of 50 largest Eurozone companies. Adidas, Airbus, Allianz, BASF, Bayer, Enel, Eni, Danone, Intesa Sanpaolo, L'Oréal , Nokia, Philips, SAP, TOTAL, Unilever, Volkswagen are among companies listed in the index;
- Eurozone’s macroeconomic data has strong effect on the index. Rising GDP, industrial production, employment, retail sales, ZEW index of business activity all support the index. If this data is negative, it will likely result in a declining index;
- The index has strong correlation with the U.S. S&P 500 broad market index, as Eurozone has strong trade relations with the United States. The index itself has an effect on European stock indexes;
- The index is very sensitive to the actions of the European Central Bank (ECB) as the monetary policy of the European monetary regulator directly affects the business performance of companies in the Eurozone. Rising interest rates, borrowing cost, declining monetary supply cuts, corporate profits, and consumer demand affect the index. Monetary tightening puts pressure on the index, while easing monetary policies support the index.
- High inflation in the Eurozone puts pressure on the index. If inflation is far above the 2% target, it may lead to additional monetary tightening by the ECB. If inflation is below the target, retail sales are likely to expand, which supports the index;
- The EURO STOXX50 index is a risky asset and reacts to risk appetite and investors’ sentiment. Positive developments in the global economy and geopolitics support the index, while uncertainties, stress, and geopolitical tensions put pressure on the index;
- The index is a diversified asset and is suitable for conservative and long-term investors. It has lower volatility compared to currencies, energies, and individual stocks;
- The index could be traded via CFDs, futures, or designated ETF’s;
- The index is linked to the European stock market’s opening hours, but futures and CFD trading on the index continues mostly throughout a 24/5 basis, excluding weekends. So, the index may open with a gap if something very important has happened during a weekend.