European stocks seeing outsized moves data, investors
Hedge funds, changed market structure seen as behind trend
Share moves have less to do with company fundamentals sources

July 15 Reuters European companies are seeing outsized gains and losses in their shares when they report earnings, a Reuters analysis shows, a trend that has more to do with the growing sway of fast money in the 15 trillion market than with business prospects.

Take the top 60 companies in Europe39;s broad STOXX 600 Index when they reported earnings over the past year, their average daily stock moves were 18 higher than eight years ago, the analysis of more than 120,000 days of share price data from LSEG shows.

The swings on earnings days over the past 12 months were the largest since at least 2016, when compared to average daily moves, the survey shows.

The reasons for this rise in volatility are hard to pin down precisely but stem in large part from the growing dominance of hedge funds that chase trends in search of quick profit, according to interviews with two dozen traders and investors as well as a review of broker research for hedge funds and other sophisticated investors.

You have mostly shortterm money driving the market, said Krishna Kumar, CIO at Goose Hollow, a macro hedge fund. So, participants who are not interested in the stock for the next five years but are looking at it for the next five days.

A dozen of the experts interviewed by Reuters including equity trading chiefs…