Euro Stoxx 50 Enters Bear Market as Hope for Year-End Rally Vanishes

The Euro Stoxx 50 entered a bear market Thursday as a rally in U.S. stocks fizzled, dashing hopes for a year-end rebound in European shares.

The benchmark for stocks in the euro region initially gained as European markets re-opened after the Christmas break, encouraged by the biggest U.S. rally since 2009 on Wednesday. The optimism lasted a mere hour before markets retreated into the red, weighed down by losses in U.S. futures. The gauge closed 1.2 percent lower.

The benchmark, which flirted with the level last week, closed at 2,937.36, down 21 percent from a peak in November 2017, following other European indexes including Germany’s DAX and Italy’s FTSE MIB which closed in bear territory this year. The broader Stoxx Europe 600 benchmark also edged closer to a bear market with Thursday’s close only about 2.2 percent away.

“My medium-term view hasn’t really changed since the weekly chart broke to new lows a couple of weeks ago, with the resulting bearish setup suggesting more downside and offering resistance to any rally,” said Andy Dodd, technical analyst at Louis Capital Markets in London.

The benchmark, home to the 50 biggest companies in the euro area by market value including drugmaker Sanofi, luxury-goods company LVMH and industrial conglomerate Siemens AG, is headed for its worst year since 2011, bringing a six-year winning streak to an end. A trade war between China and the U.S., slowing momentum to the economy and earnings, as well as political risks from Brexit to Italy and France have all weighed on European stocks this year.

Among the index’s worst performers are several German companies such as Bayer AG, which is facing legal trouble following its acquisition of Monsanto, and Deutsche Post AG, the global logistics company. Banks are the second-biggest single group in the index and set to become the worst-performing sector in Europe this year. ING Groep NV, BNP Paribas SA, Banco Bilbao Vizcaya Argentaria SA and Societe Generale SA also feature among the laggards, with Deutsche Bank AG shedding so much market value that it was removed from the gauge in September.


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Ed Moya

Ed Moya

Contributing Author at OANDA
With more than 20 years’ trading experience, Ed Moya was a Senior Market Analyst with OANDA for the Americas from November 2018 to November 2023. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Prior to OANDA he worked with, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business, cheddar news, and CoinDesk TV. His views are trusted by the world’s most respected global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Seeking Alpha, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.