Day without changes for the IBEX 35which begins on Wednesday, May 4, with a variation of 0,14%until the 8,602 points, after the start of the opening session. Compared to previous days, the IBEX 35 chains two consecutive days in green.
If we consider the data of the last week, the IBEX 35 scores a raise 1,47% although, on the contrary, for a year it has still maintained a decrease in 4,29%. The IBEX 35 stands one 3,2% below its maximum so far this year (8,886.20 points) and a 12,52% above its minimum price for the current year (7,644.60 points).
Stock market indices… for what?
a stock index is an indicator that shows how the value of a set of assets changesso it collects data from different companies or sectors of a fragment of the market.
These indicators are mainly used by the stock exchanges of various countries 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 business, there are also 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 company shares. If investors lack confidence, share prices tend to fall.
They also work to measure the performance of an asset manager and allow a comparison to be made between profitability 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. He looked closely at 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
Currently there are various indices and they can be grouped 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 mostly 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 a stock index measured?
Each stock index has its own way of calculating, but the main component is the market capitalization of each firm 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.
Companies listed on the stock exchange are required to present a balance of its composition. This report must be delivered every three or six months, as the case may be.
Reading a stock index also implies observing its evolution over time. New indices always appear with a fixed value based on stock prices on your start date, but not everyone follows this method. Therefore, it can be misleading.
If one index adds 500 points in a day, while another only achieves 20, it might seem that the first one performed better. But, if the former started the day at 30,000 points and the other at 300, you can see 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 Jones, which is made up of 30 companies. Also, the S&P 500, which includes 500 of the largest companies on the New York Stock Exchange. Finally, do not forget the Nasdaq 100which associates 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 outstanding 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 continentthe main stock indices are the Nikkei 225, made up of the 225 largest companies on the Tokyo Stock Exchange. There is also the SSE Composite Index, which appears as the preponderant of China, made up of the most relevant companies on the Shanghai Stock Exchange. The same role played by Hang Seung index in Hong Kong and the KOSPI in South Korea.
Talking about Latin Americayou have the IPC which contains at 35 most influential firms of the Mexican Stock Exchange (BMV). At least a third of them belong to the capital of tycoon 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 IGBC of Bogota; the IBC of Caracas, made up of 6 companies from Venezuela.
Similarly, there are other types of global stock market 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 100made up of the 100 most powerful multinational firms on the planet.
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