This year, the markets have experienced constant volatility. (Infobase)

Good connection for CAC 40which begins on Monday, February 13 with slight increases in 0.35%until the 7,154.65 points, after the start of the opening session. Compared to previous days, the CAC 40 it reverses the roles compared to that of the day before, where it marked a drop of 0.96%, without being able to establish a stable trend in the last dates.

Considering the last seven days, the CAC 40 marks an increase of 0.25%so that year-over-year there is still an increase of 5.4%. He CAC 40 is located at 1.1% below its maximum this year (7,233.94 points) and a 8.49% above its floor rate for the current year (6,594.57 points).

What is a stock index and what is it used for?

a stock market index It is an indicator that is used to know the evolution of the price of a certain set of therefore collects data from different companies or sectors of a market fragment.

These indicators are mainly used by the stock markets of various countries and each of them can be integrated by companies with specific needs like having a similar market capitalization or being in the same type of industry, similarly, some indices only consider a handful of stocks to determine their value or others that consider hundreds of stocks.

Stock indices serve as indicator of confidence in stock market, business confidence, health of national and global economy and stock investment performance and shares of a company. Generally, if investors lack confidence, stock prices will tend to fall.

They are also working to measure the performance of an asset manager and they allow investors to compare 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 study how company stocks tended to rise or fall together, he created two indices: one that contained the 20 largest railway companies (as it was the largest industry at the time) , as well as 12 shares of other types of companies

Currently in humanity there are various indices and they can cluster based on location, industries, company size, or even asset typeFor example, the American Nasdaq index is made up of the 100 largest companies mainly 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 calculation method, but the main factor is the market capitalization of each company that incorporates it. This is obtained by multiplying the daily value of the bond in the corresponding stock market by the total number of shares outstanding in the market.

Listed companies are required to present a balance sheet of its composition. This report must be made public every three or six months, as the case may be.

Reading a stock market index also requires taking into account its evolution over time. Current indices always open at a fixed value based on stock prices on their start date, but not everyone follows this method. Therefore, this may lead to inaccuracies.

If one index gains 500 points in one day, while another adds only 20, it may seem that the former has performed better. However, if the first started the day at 30,000 points, and the other at 300, we can conclude that in percentage terms the gains for the second were considerable.

The main stock market indices

Between the main stock indices of the American Union is the Dow Jones Industrial Average, better known as the Dow Jones, made up of 30 companies. Likewise, the S&P500, which includes 500 of the largest companies on the New York Stock Exchange. Finally comes the Nasdaq 100which associates 100 of the largest non-financial companies.

On the other hand, the most important indices of Europe are the Euro Stoxx 50, which covers the 50 largest companies in the euro area. Furthermore, the DAX 30, the main German index containing the most outstanding companies on the Frankfurt Stock Exchange; there FTSE100 the London Stock Exchange; he CAC 40 of the Paris Stock Exchange; and the IBEX 35of the Spanish stock exchange.

In Asiathe main stock market indices are the Nikki 225, made up of the 225 largest companies on the Tokyo Stock Exchange. There is also the SSE composite index, is considered the main in China, consisting of the most important companies of the Shanghai Stock Exchange. The same role played by the Hang Seung Index in Hong Kong and the KOSPI in South Korea.

As it concerns the Latin American regionyou have the IPCwhich contains the 35 most prestigious companies on the Mexican Stock Exchange (BMV). At least a third of them are part of the estate of tycoon Carlos Slim.

Another is the Bovespa, composed of the 50 most important companies of the Sao Paulo Stock Exchange; he Merval from Argentina; he IPSA From Chile; he MSCI COLCAP Columbia; he IBC of Caracas, made up of 6 companies from Venezuela.

In addition, there are other types of global stock indices such as the MSCI Latin Americawhich includes the 137 most important companies from Brazil, Chile, Colombia, Mexico and Peru.

Likewise, there is MSCI World, which brings together 1,600 companies from 23 developed countries; he 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 corporations on the entire planet.

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