The main Lisbon index reopens with a bullish trend on February 14

Good start to the day psi 20which opens the session of Tuesday, February 14 with slight increases in 0.44%until the 5,918.91 points, after opening. Compared to previous days, the psi 20 The direction of the previous data changes, where a drop of 0.33% was recorded, showing that it is unable to consolidate a trend of the last dates.

Looking at last week’s data, the psi 20 marks a decrease of 0.08% even if, on the contrary, from one year to the next, it always maintains an increase in 8.31%. He psi 20 is located 2.03% below its maximum this year (6,041.64 points) and a 1.54% above its floor rate for the current year (5,829.15 points).

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

a stock market index It is an indicator used to show the evolution of the value of a certain set of assets.for which you need to have 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 signatures 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. 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 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. carefully observed how the stock prices of companies tended to rise or fall together, so he created two indices: one containing the 20 largest railway companies (since this was the largest industry in the world). era), as well as 12 shares of other types of companies

Today in our economy there are various indices and they can be grouped by geographic location, industries, company size, or even asset typeFor 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 way of being measured, but the main component is the market capitalization of each company that incorporates it. This is obtained by multiplying the daily value of the share 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 disclosed every three or six months, as the case may be.

Reading a stock market index also means being attentive to its evolution over time. Current indices always start with a fixed value based on security prices on their start date, but not everyone follows this method. Therefore, it may seem misleading.

If one index gains 500 points in one day, while another only gains 20, it may seem that the former has outperformed. However, if the first started the day at 30,000 points and the other at 300, we can assume that in percentage terms the gains of the second were more remarkable.

What are the main stock market indices?

Between the major US stock indices is the Dow Jones Industrial Average, better known as the Dow Jones, of which 30 companies are part. Likewise, the S&P500, which includes 500 of the largest companies on the New York Stock Exchange. Finally, 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 important companies of 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 continentthe main stock market indices are the Nikki 225, made up of the 225 largest companies on the Tokyo Stock Exchange. Also SSE composite index, which is listed as the most notable in China, consisting of the most important companies on 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 belong to 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.