good opening for FTSE MIB IDXwhich begins the day on Wednesday, August 17 with slight increases in 0.6%until the 23,135.30 points, after the start of the opening session. Regarding the variations of this day with respect to past days, the FTSE MIB IDX chains five consecutive dates on positive values.
In relation to the profitability of the last seven days, the FTSE MIB IDX accumulates an increase in 2.88%; Despite this, in year-on-year terms, it still maintains a drop in 11.18%. The FTSE MIB IDX stands a 17.85% below its maximum this year (28,162.67 points) and a 12.56% above its minimum valuation so far this year (20,554.33 points).
Stock market indices… for what?
a stock index is an indicator that shows how the value of a set of assets changesfor which it collects data from different companies or sectors of a part of the market.
These indicators are mainly used by the stock exchanges of the countries and each of them can be integrated by firms with specific characteristics 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 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. Generally, if investors lack confidence, stock values will tend to fall.
They also work to measure the performance of an asset manager and allow analysis of comparisons between profitability 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. carefully analyzed 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 geography, sectors, company size or even the type of assetFor 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 factor is the market capitalization of each company that integrates it. This is obtained by multiplying the value of the day of the title in the corresponding stock market by the total number of shares that are in the market.
Listed companies are required to present a balance of its composition. This report must be delivered every three or six months, as the case may be.
Reading a stock index also requires taking into account its variations over time. Current indices always open with a fixed value based on stock prices on your start date, but not everyone follows this method. Therefore, it can lead to failures.
If one index gains 500 points in a day, while another gains only 20, it might appear that the first index outperformed. But, if the former started the day at 30,000 points and the other at 300, it can be assumed that, in percentage terms, the gains for the latter were larger.
Major stock indices
Between the major US stock indices There is the Dow Jones Industrial Average, better known as dow jones, which is made up of 30 companies. Similarly, the S&P 500, comprising 500 of the largest companies on the New York Stock Exchange. Finally, do not forget the Nasdaq 100which brings together 100 of the largest non-financial firms.
On the other hand, the most outstanding indices of Europe are the Eurostoxx 50, which covers the 50 largest companies in the eurozone. On the other hand, the DAX 30, the main German index containing the strongest companies on the Frankfurt Stock Exchange; the FTSE100 from the London Stock Exchange; the ACC 40 of the Paris Stock Exchange; and the IBEX 35of the Spanish stock market.
In the asian continentwe have the Nikkei 225, made up of the 225 largest companies on the Tokyo Stock Exchange. There is also the SSE Composite Index, which is listed as the main one 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.
Talking about the Latin American regionyou have the CPIwhich contains at 35 most outstanding firms of the Mexican Stock Exchange (BMV). At least a third of them are owned by magnate 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.
Likewise, 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.