Trading the Euro Stoxx 50 Index: What Is the Europe 50?

TL;DR

• The Euro Stoxx 50 is a key European stock market index taking into account 50 blue chip companies across different sectors.
• The European index includes shares from 7 Eurozone countries: Belgium, France, Finland, Germany, Italy, the Netherlands, and Spain (with France and Germany representing more than 66% of the index).
• Technology, industrial goods and services, as well as consumer products and services sectors represent more than 45% of the index.
• It was created by STOXX Limited in 1998.

Mirroring the role of the S&P 500 in the United States, the Europe 50 (FESX) or Euro Stoxx 50 index serves as a leading benchmark for the Eurozone’s stock market performance.

Unlike individual country indices, like Germany’s DAX 40 (FDAX) or Spain’s Ibex 35 (IBX), the key European equity market offers a broader perspective on the performance of large European companies.

What is the Euro Stoxx 50 index? How is the index measured? What companies are in the Europe 50 index? What moves the price of the Euro Stoxx 50? How can you trade the European index movements? Let’s take a closer look at the Euro Stoxx 50 in this trading guide.

What Is the Europe 50 on Plus500?

The Europe 50 (FESX) contract offered by Plus500 is a Future CFD or Contract For Difference based on the Euro Stoxx 50 index futures from the Eurex allowing traders to trade the key Eurozone stock index. The Eurex or Eurex Exchange is a leading player in the derivatives market, which focuses on futures and options contracts tied to European assets.

Euro Stoxx 50 Explained: What Is the Euro Stoxx 50?

What Does the Euro Stoxx 50 Index Represent?

By focusing on the 50 supersector leaders in the Eurozone, the sectoral composition of the Euro Stoxx 50 index provides a snapshot of the Eurozone’s economic landscape and the main stock-market sentiment inside this economic zone. It can be a valuable tool for understanding the overall health and performance of the European stock market.

When Was the European Blue-Chip Index Created?

The Euro Stoxx 50 is managed by the index provider STOXX Limited, which is owned by Deutsche Börse AG. The inception date of the index is February 26, 1998, but its base value is December 31, 1991.

How Is Europe 50 Calculated?

The Euro Stoxx 50 selects 50 of the largest companies from 20 EURO STOXX Supersector indices in market capitalisation, aiming for a 60% coverage of the free-float market cap of the corresponding EURO STOXX TMI Supersector index. Companies are weighted by market cap with a 10% maximum representation, resulting in a diversified and constantly updated index reflecting real-time share price changes between 9:00 CET to 18:00 CET.

What Are the Euro Stoxx 50 Trading Hours?

At the Eurex, a typical trading day runs from 07:30 to 22:00 CET through three phases: Pre-Trading, Trading and Post-Trading.

The Euro Stoxx 50 Composition

What Are the Super Sectors Represented in the Euro Stoxx 50?

The Euro Stoxx 50 reflects a diverse range of industries within the Eurozone economy.

As of February 2024, companies from the technology (17.7%), the industrial goods and services (14.5%), the consumer products and services (13.5%), and the bank (10.5%) sectors take the lead, accounting for more than half of the index (56.2%).

The remaining companies fall under categories like insurance (6.5%), automobile and parts (6.3%), health care (5.4%), energy (5.1%), chemicals (4.1%), and food, beverage and tobacco (3.4%).

Top Country Weighting of Europe 50 Index

The Euro Stoxx 50 boasts a geographically diverse sectoral composition within the EuroZone, with France (41%), Germany (25.7%), and the Netherlands (15.6%) leading as of February 2024.

However, the composition of this key European index isn’t limited to these powerhouses, as blue-chip European companies from Italy (8.1%), Spain (6.5%), Finland (1.7%) and Belgium (1.4%) also round out this European market barometer.

Top 10 Components of the Euro Stoxx 50

When trading the Europe 50 index, traders might find it useful to know about the largest contributors to the index performance, as any large price movement from these stocks will have a larger impact on the overall value of the index.

The Top 10 Companies in the Euro Stoxx 50 Index*:

1. ASML (ASML.AS) - Technology - Netherlands - 10.135%
2. LVMH Moet Hennesy (MC.PA) - Consumer Products and Services - France - 6.294%
3. SAP (SAP.DE) - Technology - Germany - 5.101%
4. Total Energies (TTE.PA) - Energy - France - 4.109%
5. Siemens (SIE.DE) - Industrial Goods and Services - Germany - 3.957%
6. Schneider Electric (SU.PA) - Industrial Goods and Services - France - 3.471%
7. L’Oréal (OR.PA) - Consumer Products and Services - France - 3.095%
8. Allianz (ALV.DE) - Insurance - Germany - 2.957%
9. Sanofi (SAN.PA) - Health Care - France - 2.910%
10. Air Liquide (AI.PA) - Chemicals - France - 2.842%

*As of February, 2024.

How Often Is the Composition of the Euro Stoxx 50 Reviewed?

The Euro Stoxx 50 index undergoes a complete composition review annually in September. To ensure it always reflects the evolving landscape of the Eurozone’s leading blue-chip companies and respects the component selection criteria, ongoing maintenance is also implemented usually on a monthly basis.

What Factors Influence the Value of Europe 50 Index?

Here are some of the events or factors that can drive the price of the index up or down:

• European corporate earnings.
• Global and Eurozone economic outlook.
• European economic indicators and worldwide macroeconomic data, such as GDP, inflation and PMI among others.
• Decisions from the European Central Bank (ECB) on monetary policy, especially about interest rates.
• Currency fluctuations, such as the EUR/USD (EURUSD) and the EUR/GBP (EURGBP).
• Political events, such as elections and trade wars.
• Unexpected events, such as pandemics, wars, and natural disasters.
• European regulatory environment.
• Trader sentiment and trading psychology.

While knowing these factors can prove to be useful while trading the index, traders should remember that past performance doesn’t predict future outcomes, particularly in volatile markets.

Decoding the Euro Stoxx 50: A Combined Approach with Technical & Fundamental Analysis

To trade the Euro Stoxx 50 movements more effectively and get a comprehensive understanding of market conditions, some traders leverage a combined approach of two popular market analysis methods, technical analysis on price charts and fundamental analysis of economic factors.

Technical analysis applied to the Euro Stoxx 50 uses historical and current index price data, volume and technical indicators on the related trading chart to try to predict the direction of the index based on trends and price patterns.

Fundamental analysis of the Europe 50 index focuses on understanding the underlying factors that can impact the overall health and performance of the companies within the index through economic indicators, industry analysis, and individual company performances. It can help provide a big-picture perspective mostly based on economic and industry trends.

How to Trade the Euro Stoxx 50

There are different trading strategies that you can use on Plus500 depending on each trader’s preferences, mostly regarding risk tolerance, objectives, and trading horizon. Moreover, it is possible to trade on Plus500 in both rising and falling conditions with index CFDs. Whether traders anticipate the Euro Stoxx 50 to gain or lose value, bull and bear markets can be traded using long CFD positions and short CFD positions respectively.

Let’s now take a closer look at some popular trading strategies and techniques for index trading:

The Euro Stoxx 50’s dynamic nature makes it popular for short-term trading styles such as day trading - which focuses on opening and closing trades on the same trading day - through to strategies such as news trading and breakout trading.

The idea behind news trading is to trade economic data to seize potentially higher short-term volatility around the time of a news release. Breakout trading is used by traders looking for price acceleration when the underlying financial asset exits a specific market configuration, like a chart pattern or a trading range.

For traders with longer timeframes, swing trading can be used to focus on potential trends and turning points identification to trade price swings.

If the Euro Stoxx 50 seems to be oscillating within a predictable price range between support and resistance levels, then range trading might be a trading strategy to use. Alternatively, if the Euro Stoxx 50 exhibits a clear uptrend or downtrend, a trend trading strategy might be more suitable.

Read our dedicated ebooks on how to get ready to trade and trading examples to make the most of Euro Stoxx 50 trading. In addition to monitoring the markets yourself, you can use trading alerts that can keep you informed of important events regarding your trading account or the markets.

Why Might Traders Be Interested in the Euro Stoxx 50?

Beyond its role as a market barometer for the European economy, the Euro Stoxx 50 index offers several features that can be appealing to traders. Here’s a closer look:

• The European index offers a diversified instrument to get trading exposure to the Eurozone economy while focusing on the biggest corporate names of local supersectors.
• The Europe 50 index is among the most traded indices.
• It is therefore an accessible and liquid index to trade, allowing traders to enter and exit trading positions relatively quickly and efficiently.
• A variety of underlying financial products are based on the Euro Stoxx 50 index that can be used by traders such as Exchange-Traded Funds (ETFs)* and other funds, as well as derivatives like futures and options on the European Exchange (Eurex).
• It is a stock market index managed by a well-known official data provider, which means that it offers transparent public information about its components and its characteristics.
• Because there are a variety of financial products and trading styles available to trade the Euro Stoxx 50, this index suits different trader preferences, objectives and risk tolerance levels.
• When using CFD trading to trade Europe 50, traders can use leverage and margin trading to potentially profit from an index rise or fall.

*Availability based on regulation

What Are the Potential Risks of Trading the Euro Stoxx 50?

While trading Europe 50 can present interesting trading opportunities, it’s also important to acknowledge the inherent risks and limits involved. These include the following:

• The Euro Stoxx 50 only takes into consideration 7 Eurozone countries, therefore excluding countries that can offer other potential trading opportunities.
• Some countries such as France and Germany (which represent more than 66% of the index), and some sectors such as tech, industrial goods and services, and consumer products and services (more than 45%), have the largest weight on the composition of the Euro Stoxx 50 index.
• When using CFDs on the Euro Stoxx 50, traders gain access to leveraged trading. While leverage can magnify potential profits, it can also significantly amplify losses, potentially leading to significant losses.

Europe 50 Trading — Frequently Asked Questions (FAQs):

Is the Europe 50 a good index to trade?

Because it offers a diversified financial instrument to get exposure to some of the most powerful Eurozone economies, the Euro Stoxx 50 can offer potential trading opportunities to those interested in it.

What companies are included in the Euro Stoxx 50 index?

The Euro Stoxx 50 index tracks the performance of the 50 largest blue-chip firms across different Eurozone countries (Belgium, Finland, France, Germany, Italy, the Netherlands, and Spain), including big names like BASF (BA.DE), Kering (KER.PA), Danone (BN.PA) and Adidas (ADS.DE).

What should I watch out for when trading the Euro Stoxx 50?

There are a range of factors you should take into consideration when trading the Euro Stoxx 50, as they can have an impact on its value. Corporate earnings, ECB monetary policy decisions, as well as local and global growth outlook, are among the most important ones.

How should I get started with Euro Stoxx 50 trading?

Once you’ve learned what the Euro Stoxx 50 is, what drives its price up and down, and how to trade the index thanks to a range of trading tips, you can consider opening a Plus500 trading account to get started with the Euro Stoxx 50 and apply your trading strategy and risk management rules.

Which trading strategies are used to trade the Euro Stoxx 50?

To trade Europe 50, traders can use various trading styles, such as day trading and swing trading with strategies like news trading, breakout trading, trend trending, and range trading, among others.