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What is 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 stocks trading from 11 Eurozone countries, namely Austria, Belgium, Ireland, Italy, The Netherlands, Luxemburg, Spain, Portugal, Finland. With France and Germany as their main sectors.
The Euro Stoxx 50 is managed and licensed by STOXX Limited, which was a joint venture of Deutsche Boerse AG, 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 must be a Eurozone member country.
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 the European stocks. Today, however, its offerings are substantially broadened and include indices from nearly every country in the world.
Euro STOXX 50 Index composition
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 indices developments, and view this as a marker of Europe’s economic health.
|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, significant shifts in share price 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.
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 the index price dynamics are political events such as Brexit (UK leaving Eurozone), local elections, EU legislation issues, etc.
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.
What makes Euro STOXX 50 an attractive trading instrument
This index is one of the 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 UK traders can use the Euro stoxx 50 as a great opportunity to trade the instability of the 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_EUR50
- Trading Time: 01:10 – 20:59
- Country: Eurozone
- Currency: EUR
- The minimum trade size is 0.1 unit
- The leverage for trading the Euro STOXX 50 is usually about
- Exchange: EUREX
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DJ Euro Stoxx 50 Trading Main FAQs
- What is the Dow Jones Euro Stoxx 50 Index?
The Euro Stoxx 50 Index is a market-capitalization weighted index of 50 of the largest blue-chip European companies operating within the European Union. The 50 component stocks are selected from the Euro Stoxx Index, which includes small-cap, mid-cap, and large cap stocks. The current composition of the Euro Stoxx 50 Index includes stocks from the following countries: Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal, and Spain. This makes the index a very broad measure of economic activity all across the European Union.
- Should I trade the Dow Jones Euro Stoxx 50 Index?
As the European equivalent of the U.S. Dow Industrials or Dow 30 Index, the Euro Stoxx 50 gives traders an excellent way to speculate on the growth of the European Union economy. Because the index tracks just 50 of the largest European companies it is a concentrated index, meaning it makes stronger moves than other, more broad-based indices. This makes it ideal for those traders who are looking for a way to capitalize on strength or weakness within the EU economies.
- What is the best strategy for trading the Dow Jones Euro Stoxx 50 Index?
The best trading strategy for the Euro Stoxx 50 is the one which is best suited for the trader’s personality. Thus it could be that scalping, day trading, or swing trading might all be suitable, depending on the personality, risk tolerance, preferred methods, and knowledge of the individual trader. Of the three swing trading takes the least amount of time, while scalping and day trading require the trader to actively monitor the market during its open hours.