Login of slight movements for the IBEX 35which opens the session on Wednesday, August 10 with a variation of the 0.07%until the 8,317.50 points, after opening. Compared to previous days, the IBEX 35 accumulates seven consecutive days of rise.
Taking into account the last seven days, the IBEX 35 marks a rise in 2.15%; Despite this, for a year it still maintains a decrease in 6.18%. The IBEX 35 stands a 6.9% below its maximum this year (8,933.60 points) and a 8.8% above its minimum price so far this year (7,644.60 points).
What is a stock index and what is it for?
a stock index is an indicator that measures the evolution of the value of a certain set of assetsso it collects data from various 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, likewise, 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, share prices will tend to fall.
They also work to measure the performance of an asset manager and allow a comparison to be made 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
Currently there are various indices and they can be agglomerated according to their geography, sectors, the size of the companies or even the type of assetFor example, the US Nasdaq index is made up of the 100 largest companies mostly 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 it calculated and how to read them?
Each stock index has its own calculation method, but the main component is the market capitalization of each company that integrates it. This is obtained by multiplying the value of the day of the share in the corresponding stock market by the total number of shares that are in circulation in the market.
Listed companies are required to present a balance of its composition. Said report must be made public every three or six months, as the case may be.
Reading a stock index also requires paying attention to its changes over time. Current indices always start with a fixed value based on security prices on your start date, but not everyone follows this method. Therefore, it can be misleading.
If one index grows 500 points in a day, while another only gains 20, it might seem that the first index performed better. However, 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 significant.
Major stock indices
Between the main stock indices in the American Union There is the Dow Jones Industrial Average, better known as Dow-Jones, made up of 30 companies. Also, the S&P 500, which includes 500 of the largest companies on the New York Stock Exchange. Finally, the Nasdaq 100which links 100 of the largest non-financial firms.
On the other hand, the most important indices of Europe are the Eurostoxx 50, which covers the 50 largest companies in the eurozone. He too DAX 30, the main German index that contains the most outstanding 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 Asiawe have the Nikkei 225, made up of the 225 largest 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 important 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 Latin Americayou 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.
Similarly, there are other types of global stock market 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.