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

Day without change for the AEXwhich begins on Monday February 20 with a variation of the 0.1%until the 764.27 points, after opening. Compared to previous days, the AEX add two consecutive dates in red.

Last week the AEX recorded an increase of 0.21%so that in interannual terms it still accumulates a rise of 7.86%. He AEX is located 0.96% below its maximum this year (771.69 points) and a 8% above its floor price for the current year (707.63 points).

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

a stock market index It is an indicator that shows how the price of a certain set of assets is changingSo you need to have data from different companies or sectors in a market fragment.

These indicators are mainly used by the exchanges of each country and each of them can be integrated by companies with different specificities like having a similar market capitalization or belonging to the same type of industry, moreover, there are some indices that 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 an entity. Generally, if investors are not confident, stock prices tend to fall.

They are also working to measure the performance of an asset manager and allow investors to make comparisons between return 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 see carefully how company stocks tended to rise or fall together in price, he therefore created two indexes: one that contained the 20 largest railroad companies (since that was the largest industry in era), as well as 12 shares of other types of companies

There are currently various indices and They can join a union depending on their geographical location, their sectors, the size of the companies or the type of asset.For example, the U.S. Nasdaq index is made up of the 100 largest companies with broad technology connections 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 value of the security on the corresponding stock market by the total number of shares that are on the market.

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

Reading a stock market index also involves taking into account its evolution over time. Current indices always start with a fixed value based on stock prices on their start date, but not everyone follows this method. So it can be confusing.

If one index increases by 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, it can be deduced that in percentage terms the gains of the second were higher.

What are 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, of which 30 companies are part. Also S&P500, which includes 500 of the largest companies on the New York Stock Exchange. Finally comes the Nasdaq 100which includes 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. On the other hand, 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 the asian continentwe have the Nikki 225, made up of the 225 largest companies on the Tokyo Stock Exchange. There is also the SSE composite index, which appears as the main in China, composed of the most relevant companies of the Shanghai Stock Exchange. Also, it is worth mentioning 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 belong to the capital 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.

Similarly, 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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