Between S&P500 and Eurostoxx 50, the former clearly prevails
Last Update: 25/12/2024
A comparison between the leading U.S. index, the S&P500, and the index that groups the most important European companies, the Eurostoxx 50, tells of a clear prevalence of the former over the latter.
After reaching an annual high of about 5,100 points in May, the Eurostoxx 50 suffered significant declines, particularly during the summer, when it lost ground due to economic uncertainties related to inflation and the possibility of further rate hikes by the European Central Bank. In November, the index fell to about 4,700 points, showing a negative change of about 7 percent from its May highs, hit further by the outcome of the U.S. presidential election.
The S&P 500 showed a more resilient performance than the Eurostoxx 50, supported by strength in the technology and communications services sectors, as well as a series of solid quarters for many large U.S. companies. Needless then to mention the new upward momentum imparted by the November 5 election results.
Graphically we can represent the different situation of the two indexes with the strength ratio.
It can be seen that the first part of 2024 was favorable for the European index, while since last May concerns about economic growth in the area and expectations of a rate cut by the FED have completely reversed the picture. At the moment it is almost impossible to see a reversal of this trend.
Even considering the equal-weight version of the S&P500, that is, the one that does not take into account the capitalization of individual companies belonging to the index, the considerations that can be made are the same as those seen above.
Looking at the long-term chart (taking into account the euro/dollar exchange rate effect), it can be seen that the strength ratio is now back at the all-time highs reached in early 2022, and that the bullish stance has never failed since 2010.
