Bearish session for the Swiss Market , which begins the day on Monday, May 2 with slight decreases of 0.42% , to 12,077.71 points , after the start of the opening session. If we compare the figure with previous days, the Swiss Market puts an end to three sessions of positive streak.
In the last seven days, the Swiss Market registers a decrease of 0.06% ; by contrast, for a year it still maintains an increase of 8.72% . The Swiss Market is 6.66% below its maximum so far this year (12,939.17 points) and 9.23% above its minimum price for the current year (11,057.06 points).
Stock market indices… for what?
A stock index is an indicator that shows how the price of a certain set of assets changes , so you need to have data from different companies or sectors of a fragment of the market.
These indicators are mainly used by the stock exchanges of the countries and each one of them can be integrated by firms with certain characteristics, such as having a similar market capitalization or belonging to the same type of business, also, there are some indices that only consider a handful of shares to determine their value or others that consider hundreds of shares.
Stock indices serve as an indicator of confidence in the stock market, business confidence, the health of the national and global economy, and the return on investment in a company’s stocks and shares. Generally, if investors lack confidence, share prices tend to fall.
Likewise, they work to measure the performance of an asset manager and allow to analyze 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 the 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 in our economy there are various indices and they can be associated based on their geography, sectors, company size or even the type of asset , for example, the Nasdaq US index is made up of the 100 largest companies mostly related to the technologies 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 market 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 bond in the corresponding stock market by the total number of shares that are in the hands of investors.
Companies listed on the stock exchange are required to present a balance sheet of their composition. Said report must come to light every three or six months, as appropriate.
Reading a stock index also requires observing its evolution over time. Current indices always start with a fixed value based on share prices on their start date, but not all follow this method. Therefore, it may seem misleading.
If one index gains 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 derived that, in percentage terms, the gains for the latter were higher.
What are the main stock indices?
Among the major US stock indices is the Dow Jones Industrial Average, better known as Dow Jones , made up of 30 companies. Similarly, the S&P 500, which comprises 500 of the largest companies on the New York Stock Exchange. Lastly, we must not forget the Nasdaq 100 , which brings together 100 of the largest non-financial firms.
On the other hand, the most important indices in Europe are the Eurostoxx 50 , which covers the 50 most important companies in the eurozone. In addition, the DAX 30 , the main German index that contains the strongest companies on the Frankfurt Stock Exchange; the FTSE 100 of the London Stock Exchange; the CAC 40 of the Paris Stock Exchange; and the IBEX 35 , of the Spanish stock market.
On the Asian continent , the main stock indices are the Nikkei 225 , made up of the 225 largest companies on the Tokyo Stock Exchange. Likewise, the SSE Composite Index is seen as the most solid in China, made up of the most outstanding companies on the Shanghai Stock Exchange. Similarly, it is worth mentioning the Hang Seung Index in Hong Kong and the KOSPI in South Korea.
Regarding Latin America , there is the IPC, which contains the 35 most consolidated firms of the Mexican Stock Exchange (BMV). At least a third of them are owned by tycoon Carlos Slim.
Another is the Bovespa , made up of the 50 largest companies on the São Paulo stock exchange; the Argentine Merval ; the IPSA of Chile; the IGBC of Bogota; the IBC of Caracas, made up of 6 companies from Venezuela.
Finally, there are other types of global stock indices such as the MSCI Latin America, which 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 100, made up of the 100 most powerful multinational firms on the planet.