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AEX experiences a drop of 0.77% at the close of the day on October 5

This year the markets have registered constant volatility.  (Infobae)
This year the markets have registered constant volatility. (Infobae)

down day for him AEXwhich closed the session on Wednesday, October 5, with drops of 0.77%until the 664.45 points. The AEX marked the highest number of 669.76 points and a minimum of 661.37 points. The trading range for the AEX between its highest point and its lowest point (maximum-minimum) during this day stood at 1.25%.

Compared to the last week, the AEX scores a raise of 3.64% although, on the contrary, in year-on-year terms it still maintains a drop in 14.54%. The AEX stands a 17.39% below its maximum this year (804.28 points) and a 4.88% above its minimum valuation so far this year (633.55 points).

Stock market indices… for what?

a stock index is an indicator that shows how the price of a set of assets changesso it takes data from various companies or sectors of a part of the market.

These indicators are mainly used by the stock exchanges of various nations and each of them can be integrated by firms with specific characteristics such as having a similar stock market capitalization or belonging to the same type of business, there are also 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. If investors lack confidence, share prices 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 researched how company stocks tended to go up or down in price together, so he created two indices: one containing the top 20 railroad companies (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 geographical location, sectors, company size 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 to read an index?

Each stock index has its own calculation method, but the main component is the market capitalization of each firm 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 implies analyzing its evolution over time. New indices always start with a fixed value based on the prices of the securities on your start date, but not everyone follows this method. Therefore, it may seem misleading.

If one index grows 500 points in a day, while another only adds 20, it might appear that the first index outperformed. However, 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 higher.

These are the main stock indices

Between the major US stock indices 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 comes the Nasdaq 100which brings together 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. In addition, 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, is seen as the most representative of China, made up of the most relevant companies on the Shanghai Stock Exchange. The same role played by 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 powerful 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.

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