The Euro Stoxx 50 Index has performed well this year. It jumped over 11% and is now at its highest level since 2007. The index rose in line with its US counterparts such as the Dow Jones, Nasdaq 100 and S&P 500.
european stocks are cheap
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There are three main reasons why the Euro Stoxx 50 index performed well in 2023 while the European Central Bank (ECB) is tightening its monetary policy.
First, the rally is mainly due to the strong performance of the European economy this year. The main argument among investors in December and January was that most European countries would be plunged into recession.
He argued that most countries would suffer from higher natural gas prices. The opposite happened, and natural gas fell to its lowest level since 2021. This decline helped bring down the bloc’s inflation and boost productivity.
Second, the Euro Stoxx 50 index rose from the view that European equities were undervalued. The index has a PE ratio of 13.99 and a dividend yield of 2.78%. In contrast, the PE multiple of the S&P 500 is 22.2. Therefore, value investors believe that these stocks are the real deal.
Third, most of the companies in the index benefited from the reopening of the Chinese economy. Many of the companies included in the index do a lot of business in the country.
Adidas is the best performing stock in the Euro Stoxx 50 index with a jump of over 38%. Other top performers included Inditex, Philips, CRH, Hermes, BMW, ASML and SAP. All these stocks are up more than 30%.
adidas stock may be doing well Troubles Continue With Kanye West, ASML has grown as more companies increase their investment in semiconductor manufacturing.
On the other hand, the worst performers in the Euro Stoxx 50 index are Vonovia, TotalEnergies, BASF and AB InBev.
Euro Stocks 50 Forecast
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Stocks 50 Chart by TradingView
The Euro Stoxx 50 Index has performed well in recent months. Recently, however, the index found stiff resistance at €4,395, where it formed a triple top pattern. In price action analysis, this pattern is a bearish signal.
The index has moved slightly below the 50-day moving average but is supported by the 100-day moving average. Hence, at this point, the outlook for the Stocks index is neutral with a bearish bias. A move below the 100-day moving average would indicate that there are more sellers in the market. More gains will be confirmed if the Euro 50 index moves above the resistance point of €4,395. If this happens, the possibility of the index reaching 4,500 euros will open up.
This article was translated from English with the help of AI tools