In recent years there has been increasing interest in trading in European shares. They provide an alternative for someone prepared to do the research when the domestic financial products aren't appealing, and some traders find that the characteristics of the continental markets suit their style better than domestic shares.
Volatility in the European markets has made a big impact on investors in the last few years. And, fuelled by the ongoing uncertainty surrounding the eurozone sovereign debt crisis, many have been wary of buying into European companies.
This risk-averse behaviour has helped drive prices down more generally across Europe, making many investors more bullish about the long-term prospects for European equities.
However, this very volatility in the market can play both ways, with investors able to make money on both the long and the short side, if they know what to look for.
The European market can present a happy hunting ground thanks to a mixture of unrest, tighter financial regulation and lack of credit, and an uncertain outlook in terms of demand for products and services.
It's only in recent years that it has been so easy to become involved with overseas markets. Every spread betting broker and contracts for difference dealer has financial products that allow you to trade on the European market, and some share dealing brokers also permit trading in European equities. Spread betting and CFDs are the easiest, giving excellent leverage of your funds, and of the two spread betting has tax advantages which make it the better choice.
Note that European equities tend to release their results before the market opens so in most situtations the earnings updates would be release around 7.00 to 7.30am with most important economic data released between 8.00 and 10.00 UK time. Of course most European markets are quite convenient to trade much more so than Asian or Australian shares as the time difference is only one or two hours in most cases. European Central Bank policy and interest rate announcements are usually made at around 12.45pm on the first day of the month.
What you need to understand though is the difference between spread betting on the UK shares and European shares. You probably know that for every penny a UK share price moves you profit or lose your chosen bet size in Pounds Sterling. When you're spread betting on foreign shares the prices are quoted in euros or sometimes dollars, and for every cent movement you profit or lose by the size of your bet in Pounds Sterling. If you're betting on shares where the euro isn't used, such as Switzerland, the price will be quoted in the local currency, Swiss francs in this case.
If you're looking to trade in European shares, be prepared to follow the international news more closely. The crisis in the PIIGS -- Portugal, Ireland, Italy, Greece, and Spain -- has meant that there have been many opportunities for shorting their markets, but it has been essential to watch the progress of any bailouts which could cause a rapid swing in the opposite direction, depending on how they are perceived.
It's a good plan to sign up for international financial news at one of the many websites catering for the market. You can set up alerts on companies and countries of interest, or just get a regular periodic newsletter that will keep you up to date.
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