Good day for him Nikkei 225 which ended on Thursday, July 7, with notable increases in 1,47% until the 26,490.53 points. The Nikkei 225 scored a maximum volume of 26,533.65 points and a minimum volume of 26,136.99 points. The trading range for Nikkei 225 between its highest point and its lowest point (maximum-minimum) during this day stood at 1,49%.
In the last seven days, the Nikkei 225 notes an increase in 0,37%; on the other hand, in year-on-year terms, it still maintains a drop in 8,86%. The Nikkei 225 stands one 9,69% below its maximum this year (29,332.16 points) and a 7,17% above its minimum valuation so far this year (24,717.53 points).
What is a stock index and what is it for?
a stock index It is an indicator that shows how the price of a certain set of assets changes so it takes data from different companies or sectors of a part of the market.
These indicators are mainly used by the stock markets of different countries of the world and each of them can be integrated by firms with specific characteristics such as having a similar market capitalization or belonging to the same type of industry, in addition, there are some indices that only take into account a handful of shares to determine their value or others that consider hundreds of shares.
Stock market indices serve as indicator of confidence in the stock market, business confidence, the health of the national and global economy and the performance of investments in shares and shares of an entity. Generally, if investors lack confidence, stock prices will tend to fall.
They also work to measure the performance of an asset manager and allow investors to analyze comparisons between return and risk; measure the opportunities of a financial asset or create portfolios.
This type of indicators began to be used at the end of the 19th century after journalist Charles H. Dow. closely watched how company stocks tended to go up or down together in price, so he created two indices: one containing the top 20 railroad companies (since it was the biggest industry at the time), as well as 12 actions of other types of businesses
Today in humanity there are various indices and they can be agglomerated according to their geographical location, sectors, company size or even the type of assetFor example, the US Nasdaq index is made up of the 100 largest companies largely related to technology such as Apple (AAPL), Microsoft (MSFT), Amazon (AMZN), Facebook (FB), Alphabet (GOOG), Tesla (TSLA), Nvidia (NVDA), PayPal (PYPL), Comcast (CMCSA), Adobe (ADBE).
How is it calculated and how to read them?
Each stock index has its own way of calculating, but the main component is the market capitalization of each company that integrates it. This is obtained by multiplying the value of the day of the action in the corresponding stock market by the total number of shares that are in the hands of investors.
Listed companies are required to present a balance of its composition. Said report must be published every three or six months, as appropriate.
Reading a stock index also implies noticing its evolution over time. New indices always appear with a fixed value based on the prices of the securities on your start date, but not everyone follows this method. Therefore, it can lead to failures.
If one index gains 500 points in a day, while another gains only 20, it might appear that the first index outperformed. However, if the former started the day at 30,000 points and the other at 300, it can be deduced that, in percentage terms, the gains for the latter were larger.
What are the main stock indices?
Between the major US stock indices There is the Dow Jones Industrial Average, better known as Dow Jonesmade up of 30 companies., the S&P 500, comprising 500 of the largest companies on the New York Stock Exchange. Finally, it is necessary to mention the Nasdaq 100which brings together 100 of the largest non-financial firms.
On the other hand, the most important indices of Europa are the Eurostoxx 50, which covers the 50 largest companies in the eurozone. On the other hand, the DAX 30, the main German index that contains the most prominent companies on the Frankfurt Stock Exchange; the FTSE 100 from the London Stock Exchange; the CAC 40 of the Paris Stock Exchange; and the IBEX 35 of the Spanish stock market.
In the asian continent we have the Nikkei 225, made up of the 225 largest companies on the Tokyo Stock Exchange. Also, the SSE Composite Index, which can be considered the most representative of China, made up of the most relevant companies on the Shanghai Stock Exchange. Similarly, it is worth mentioning the Hang Seung Index in Hong Kong and the KOSPI in South Korea.
Talking about Latin America you have the IPC which contains at 35 most influential firms of the Mexican Stock Exchange (BMV). At least a third of them are owned by magnate Carlos Slim.
Another is the bovespa, made up of the 50 most important companies on the São Paulo stock exchange; the Merval from Argentina; the IPSA From Chile; the MSCI COLCAP from Colombia; the IBC of Caracas, made up of 6 companies from Venezuela.
Also, there are other types of global stock indices such as the MSCI Latin America which includes the 137 most important companies in Brazil, Chile, Colombia, Mexico and Peru.
Similarly, there is the MSCI World, which includes 1,600 companies from 23 developed countries; the MSCI Emerging Markets, made up of more than 800 companies from developing countries; and the S&P Global 100 made up of the 100 most powerful multinational firms on the planet.
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