Positive opening for IBEX 35 which begins on Thursday, May 5, with notable rises in 1,74% until the 8,648.70 points, after opening. Compared to previous days, the IBEX 35 it reverses the result of the previous day in which it experienced a decrease of 1.83%, being unable to establish a clear trend in recent times.

Taking into account the last week, the IBEX 35 records a rise in 1,6% although, on the contrary, in year-on-year terms it still accumulates a drop in 3,99%. The IBEX 35 stands one 2,67% below its maximum so far this year (8,886.20 points) and a 13,13% above its minimum valuation for the current year (7,644.60 points).

What is a stock index and what is it for?

a stock index is an indicator that shows how the value of a given set of assets changesfor which you need to have data from different companies or sectors of a fragment of the market.

These indicators are mainly used by the stock exchanges of various nations and each of them can be integrated by companies with specific characteristics such as having a similar market capitalization or belonging to the same type of business, likewise, there are some indices that only consider 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. If investors lack confidence, equity costs will tend to fall.

They also work to measure the performance of an asset manager and allow investors to make a comparison 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. 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

Today there are various indices and they can be grouped according to their location, sectors, company size or type of asset For 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 to read an index?

Each stock index has its own calculation method, 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.

Firms listed on the stock exchange are required to present a balance of its composition. Said report must be disclosed every three or six months, as the case may be.

Reading a stock index also requires examining its changes 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 be misleading.

If one index adds 500 points in a day, while another only adds 20, it might appear that the first index performed better. But, if the former started the day at 30,000 points and the other at 300, it can be concluded that, in percentage terms, the gains for the latter were considerable.

Major stock indices

Between the major US stock indices There is the Dow Jones Industrial Average, better known as Dow Jones, made up of 30 companies. Similarly, the S&P 500, which includes 500 of the largest companies on the New York Stock Exchange. Lastly, appears 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. He too 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 35of the Spanish stock market.

In Asiathe 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 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 Americayou have the IPCwhich contains at 35 most consolidated firms of the Mexican Stock Exchange (BMV). At least a third of them are part of the estate 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 MSCI COLCAP from Colombia; the IBC of Caracas, made up of 6 companies from Venezuela.

Finally, there are other types of global stock indices such as the MSCI Latin Americawhich 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.

Categorized in:

Market