The different titles that were negotiated on the auction floor had a mixed behavior
Adverse day for the Nikkei 225, which ended on Monday, December 12 with slight falls of 0.24%, to 27,833.57 points. The Nikkei 225 marked a maximum of 27,865.72 points and a minimum volume of 27,734.66 points. The trading range for the Nikkei 225 between its highest and lowest point (high-low) during this day stood at 0.47%.
Taking into account the last seven days, the Nikkei 225 marks a rise of 0.05%; however, in the last year it still maintains a decrease of 0.37%. The Nikkei 225 is 5.11% below its maximum so far this year (29,332.16 points) and 12.61% above its minimum price for the current year (24,717.53 points).
Stock indices… What for?
A stock index is an indicator that shows how the value of a set of assets changes, for which it collects data from different companies or sectors of a fragment of the market.
These indicators are used mainly by the stock markets of different countries around the world and each one of them can be integrated by companies with different specificities, 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 indices serve as an indicator of confidence in the stock market, business confidence, the health of the national and global economy, and the return on investment in a company’s stocks and shares. Generally, if investors are not confident, stock costs tend to fall.
Likewise, they work to measure the performance of an asset manager and allow investors to have comparisons between profitability and risk; measure the opportunities of a financial asset or create portfolios.
These types of indicators began to be used at the end of the 19th century after the journalist Charles H. Dow. To carefully analyze how the shares of companies tended to rise or fall together in price, he created two indices: one that contained the 20 largest railway companies (as it was the most important industry at the time), as well as 12 shares of other types of businesses
Today there are various indices and they can be clustered based on their geography, sectors, company size or even asset class, for example, the US Nasdaq index is made up of the 100 largest companies largely related to technologies 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 factor is the market capitalization of each company that is part of it. This is obtained by multiplying the value of the share on the corresponding stock market by the total number of shares that are in the hands of investors.
Companies that are listed on the stock market are required to present a balance sheet of their composition. Said report must be disclosed every three or six months, as the case may be.
Reading a stock index also requires examining its evolution over time. New indices always start with a fixed value based on the stock prices on their start date, but not all follow this method. Therefore, it can appear misleading.
If one index grows 500 points in one day, while another only adds 20, it might appear that the former 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 more remarkable.
What are the major stock indices?
Among the main stock indices in the American Union is the Dow Jones Industrial Average, better known as Dow Jones, which includes 30 companies, the S&P 500, which includes 500 of the largest companies on the New York Stock Exchange. Lastly comes the Nasdaq 100, which links 100 of the largest non-financial firms.
On the other hand, the most important indices in Europe are the Eurostoxx 50, which covers the 50 most important companies in the euro area. 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 of the London Stock Exchange; the CAC 40 of the Paris Stock Exchange; and the IBEX 35, of the Spanish stock market.
On the Asian continent, we have the Nikkei 225, made up of the 225 most important companies on the Tokyo Stock Exchange. There is also the SSE Composite Index, which can be considered the most notable in 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.
With regard to the Latin American region, there is the IPC, which contains the 35 most outstanding firms on the Mexican Stock Exchange (BMV). At least a third of them are owned by tycoon Carlos Slim.
Another is the Bovespa, made up of the 50 most important companies on the Sao Paulo Stock Exchange; the Merval from Argentina; the IPSA of Chile; the MSCI COLCAP of 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 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 entire planet.