The Euro Stoxx 50 index represents blue-chip companies which are leaders in their sectors. But what happens when those leaders begin to peel away – one by one? Consult our November Global Market Perspective:
In line with a late-stage stock market advance, the few stocks propping up the averages have become even fewer. The Global Market Perspective discussed the situation in September, illustrating Primary wave Ⓥ in the DAX Heavyweights: Allianz, Siemens, Munish Re, and Deutsche Telekom. The same dynamic is evident across the Continent:
Since 2009, a market-cap weighted average of Euro Stoxx 50’s five largest companies — ASML, LVMH, L’Oreal, Hermes, and SAP — has jumped by a factor of 20. Yet the entire Stoxx 50 itself is up less than 200% over the same period. Meanwhile, four out of the five companies represented in this index have abandoned the bull market. LVMH, the French luxury conglomerate, topped out in April 2023, more than a year ago (see inset). Two more luxury giants — Hermes and L’Oreal — peaked in March and June of this year. ASML, the Dutch company that supplies virtually all the photolithography equipment for the semiconductor industry, abandoned the bull market this past July, leaving just SAP, the German software giant that has gained 66% this year. Let’s be clear: The bull market’s deterioration from an entire list of stocks to a small handful of shares to a single stock makes the broad averages extremely vulnerable to decline.
Our November Global Market Perspective also focuses on a financial technology ETF which appears to be at or near a pivotal juncture. Get our specific analysis of this ETF, along with our review of major global stock indexes, bonds, gold, silver, cryptocurrencies, forex and energy. Follow this link to learn more now.
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