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What is the Dow Jones Euro Stoxx 50?

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  • Written By: Nicholas K.
  • Edited By: R. Halprin
  • Last Modified Date: 25 September 2016
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The Dow Jones Euro Stoxx 50 is a market index that tracks some of the top stocks and funds in the European Union. This index features a cross section of European corporations from the Iberian Peninsula to the North Sea. Investors utilize this European market to trade standard stocks, futures and exchange-traded funds (ETFs). The overall value of the index each day is calculated by analyzing changes in 12 participating markets. The Euro Stoxx 50 changes each year after an assessment of stock values traded on markets within participating nations.

Nations participating in the Dow Jones Euro Stoxx 50 coincide with those that utilize the euro currency within the Eurozone. The index draws from corporations deemed to be financially stable and low on debt in 12 nations. The Euro Stoxx 50 features the Benelux countries of Belgium, Netherlands, and Luxembourg. Northern European nations like Ireland, Belgium, Germany, and Austria also participate in this market. Corporations from Finland, Italy, Greece, Portugal, and Spain form the remainder of the Dow Jones Euro Stoxx 50 roster.

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The Dow Jones Euro Stoxx 50 is similar to the Dow Jones Industrial Average in the U.S. in representing a broad range of financial trading options. Investors can buy and sell individual shares of participating corporations through individual national markets. Traders are able to view the prices on crude oil, grains, and other futures categories prior to trading. This index also reflects changes in the ETF market, which allows a trader to purchase multiple stocks in a package instead of taking risks on individual stocks.

Dow Jones uses the same formula from the Industrial Average to assess the value of the Euro Stoxx 50. The calculation starts by adding up the overall share prices for stocks offered by all 50 companies. This total is divided by the Dow Jones Divisor, a number adjusted regularly to reflect the overall health of the market. The resulting value can be used by financial experts to assess upward or downward trends in Europe’s biggest companies.

The composition of the Dow Jones Euro Stoxx 50 is adjusted at the end of each fiscal year. Experts at Dow Jones analyze changes in member markets to find the top 40 publicly trade companies by share value. The remaining spots are filled by companies in the top 60 of each market with the highest share increase over the past year. The Euro Stoxx 50 also considers inclusion of corporations that have been successful in past years but experienced lower share value due to global economic circumstances.

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