European and UK shares

Europe has no single equity market. It has a set of national venues that grew up separately, converged on a broadly common session shape, and kept their currencies, their settlement conventions, their dividend habits and their tax codes. A reader who treats the region as one market will be right about the trading day and wrong about almost everything that surrounds it. This guide separates what the venues share from what they do not.

The venues, and what each one lists 

The German market centres on the Frankfurt electronic order book, which carries the large industrial, chemical, insurance and software names: SAP SE, Siemens AG, Allianz SE, BASF SE, Bayer AG, Mercedes-Benz Group. The Paris market carries the luxury, energy and aerospace cluster: LVMH, Hermès International, Kering, TotalEnergies, Airbus SE, Sanofi. Amsterdam carries ASML Holding, Philips and ING Groep, and shares an operator with Paris. Zurich carries the Swiss pharmaceutical and food group, Nestlé SA, Roche Holding, Novartis AG and UBS Group. Madrid carries Banco Santander, Iberdrola and Inditex. Milan carries Eni SpA, Enel SpA and Intesa Sanpaolo.

London sits alongside all of them rather than inside them. The London listings skew heavily towards energy, mining, banking, pharmaceuticals and consumer staples: Shell plc, BP plc, Rio Tinto, Glencore plc, HSBC Holdings, Barclays plc, AstraZeneca, GSK plc, Unilever plc, Diageo plc, British American Tobacco. A large share of the earnings behind those companies is generated outside the United Kingdom and in currencies other than sterling, which is why the London market has an unusual relationship with its own currency: a weaker pound raises the sterling value of foreign earnings for many of its largest constituents, and that arithmetic is visible in how the index and the currency move against one another.

One session shape, two clocks 

The continental venues run on Central European Time and London runs one hour behind on UK time, and both observe daylight saving on the same dates, so the gap between them is constant through the year. The shape of the day is common: an opening call auction, a continuous session with no lunch break, and a closing call auction that strikes the official close. Individual venues insert intraday volatility auctions when a share moves beyond a defined band, which pause continuous trading in that one instrument and restart it with a fresh call.

The overlap is the part worth holding on to. The European afternoon runs into the United States morning, so European shares spend the last part of their session trading alongside the US open, and the largest of them, particularly those with US listings or heavy US revenue, take a great deal of direction from it. The European morning, by contrast, is trading on Asian news and on whatever arrived overnight from the US close.

Currencies, quotation and dividends 

The euro area venues quote in euros, London quotes in pence for most listings, and Zurich quotes in Swiss francs. That matters twice over for a contract written on one of these shares. The result of the position is denominated in the quoting currency and converted when it is booked, and the price itself carries a currency exposure that the company's own accounts may not share, which is the London anomaly described above.

Dividend habits differ from the US pattern too. Many continental European companies pay a single large annual dividend rather than four quarterly ones, and some pay semi annually. The date on which the share begins trading without entitlement to it therefore produces a much larger mechanical price drop than a quarterly payer's does, all at once, on one morning. A CFD position is adjusted for that drop rather than exposed to it, because the drop is a consequence of the entitlement changing hands and not a market move.

The national differences that survive 

Several European jurisdictions apply a transaction tax to the purchase of shares, and the United Kingdom's stamp duty on share purchases is the best known of them. Others apply a levy to trades in the largest domestic listings. These are properties of the jurisdiction and of the transaction type rather than properties of the company, and they are one of the recurring reasons cited for the difference in dealing cost between one national market and another.

Two further structural differences are worth knowing. Free float varies far more widely in Europe than in the US, because family holdings, foundation holdings and state holdings are common among the largest listings, so a company can be enormous by capitalisation while a comparatively small proportion of its shares is available to trade. And several large European groups carry dual share classes with different voting rights and separate lines on the exchange, which is why two apparently identical listings for one company can trade at persistently different prices.

What reaches a contract written on one 

A CFD on a European or UK share references the price on the listing venue, in the venue's currency, and only while that venue is open. It settles the difference in cash on a stated number of shares, so no transfer of title occurs and no entry appears on any register.

The regional details that reach the contract are therefore the currency of denomination, the dividend rhythm and its adjustment, the corporate action policy for splits and rights issues, and the shape of the trading day, including the intraday volatility auctions that interrupt continuous quoting in a single share. The tax treatment of an outright purchase does not reach the contract as a mechanic, because the contract is not a purchase, and the personal tax position of any holder is outside the scope of a market description entirely. The broader comparison is set out in the guide on share CFDs compared with owning shares.