What Is The Stoxx50 / EURO STOXX 50?

BY Chris Andreou

|December 9, 2020

The Stoxx50, otherwise known as the Euro Stoxx 50 or the Dow Jones EUROSTOXX 50, is the leading and most-respected index of European stocks.

The Stoxx50 is a market capitalisation-weighted stock index representing the 50 largest, blue-chip companies with the highest market value per share operating within the eurozone. It’s considered the benchmark institutional investable stock market index in Europe and therefore an indicator of the overall health and stability of the eurozone.

It comprises companies from 9 eurozone countries: Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, and Spain.

The index is managed and licensed by STOXX Limited, which was a joint venture of Deutsche Börse AG (which issues DAX 30 index), Dow Jones & Company and the SWX Group.

The biggest companies under the EURO STOXX 50, as of Oct. 30, 2020, include

ASML Holding NV, LVMH Moët Hennessy Louis Vuitton, Linde plc, Siemens AG, and L’Oréal SA – representing nearly 16% of the index.

Traders and companies can trade and buy stocks through stock options, futures contracts and ETFs (exchange-traded funds).

What Moves The Stoxx50?

The Stoxx50 is a price-weighted index, which means the index is an average of the share prices of all the companies listed. It comprises several industries including oil & gas, technology, banks, health care, as well as industrial goods & services, plus many others. The price of the eurozone companies listed on the index drives the overall price.

Some of the most influential drivers of the index are:

  • Banking sector: Currency markets have a particularly high influence on the index’s performance.
  • Political turmoil & government policies: As with other indices, any event that affects the political/economic backdrop can hit the index. Political events such as Brexit (the UK leaving the Eurozone), local elections, EU legislation issues, can have a significant effect.
  • Economic data: The index is heavily influenced by economic reports such as unemployment rates, job creation, inflation, and other economic benchmarks. Country-wide or sectoral economic shifts, industry-specific taxation or legislation changes, significant shifts in share price of one or several of the major constituents, and trade agreements, also play a huge part.

Many of the companies listed are French and German, meaning volatility in the economy of these countries is high and therefore has a large effect on the Stoxx50.

With the Stoxx50 being largely affected by European news (the index has been extremely volatile during times of crisis in the eurozone), it can be a volatile instrument and provides some exciting opportunities to traders.

How Can I Trade The Stoxx50?

The Stoxx50 is tradable under a single instrument on the TIOmarkets platforms. You can buy (go long) or sell (go short) on Stoxx50 and many other indices.

What Are The Best Conditions For Trading The Stoxx50?

As we saw during the early stages of the covid-19 pandemic, indices across the world can be prone to large swings up or down based on economic turmoil and recovery.

Trade protection: Using risk management tools like TIOshield, which lets you cancel any trade within 1 hour to recoup your money, can help protect your trades against sudden breaking news that may swing the markets one way or another.

TIOshield is only available at TIOmarkets.

Execution speeds: Slow order processing time can lead to a big difference between the price you see when you click to open a trade, and the actual price your order is opened at. This difference between prices is called “slippage”.

At TIOmarkets, we have some of the fastest execution speeds you can find, resulting in minimal slippage and more orders filled at the price you click.

Leverage: Normally, a large amount of starting capital is required to invest seriously in stocks and indices, because only a small amount of stocks is not likely to yield the kind of results most traders are seeking.

High leverage can greatly increase both the risk to your investment and the potential returns.

If you are comfortable with a high level of risk in return for higher potential gains, you may want to seek a leverage ratio that is commensurate to your investment goals.The Stoxx50 is a liquid market with high trading volume, meaning you’ll be able to enter and exit trades with a minimum of slippage and benefit from tight spreads.

Risk disclaimer: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Never deposit more than you are prepared to lose. Professional client’s losses can exceed their deposit. Please see our risk warning policy and seek independent professional advice if you do not fully understand. This information is not directed or intended for distribution to or use by residents of certain countries/jurisdictions including, but not limited to, USA & OFAC. The Company holds the right to alter the aforementioned list of countries at its own discretion.

Chris Andreou

Experienced independent trader

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Trade responsibly: CFDs are complex instruments and come with a high risk of losing all your invested capital due to leverage.