Nikkei 225 Commences on May 14th: Stock Market Opens for Business on the Delimited Date
Wednesday's Nikkei 225 Recap
Take a peek at what transpired on May 14 as the Nikkei 225 commenced the day with a minor fluctuation of 0.12%. The index showcased a strong performance, recording five consecutive positive sessions, reaching 38,228.01 points.
If you're curious about other market happenings, here's a tasty morsel: the closing value of the US dollar in Bolivia on May 12.
The Nikkei 225 experienced a 3.94% surge last week, although it still hovers 0.46% below its one-year mark. It's worth noting that the index is 4.63% below its year-to-date high (40,083.30 points) and 22.78% above its year-to-date low (31,136.58 points).
But what on earth is a stock market index, anyway?
Put simply, a stock market index is an indicator that keeps tabs on the price shifts of a specific collection of assets. To gather the data, it relies on info coming from assorted companies or market sectors. These indicators play a crucial role in various stock exchanges worldwide, helping investors compare returns, evaluate risk, and create portfolios.
(Did you know that Charles H. Dow, a journalist, is credited for initiating the use of stock market indices in the late 19th century? He carefully observed how stock prices would often move together and subsequently created two indices—one containing the 20 most significant railway companies, and another with 12 assorted businesses.)
Today, there are numerous indices that can be categorized by their location, sectors, company size, or even the type of asset. For instance, the US Nasdaq index is primarily occupied by the 100 largest tech companies like Apple, Microsoft, Amazon, Facebook, Google, Tesla, Nvidia, PayPal, Comcast, and Adobe.
How are stock market indices calculated, and how should they be interpreted?
Each index has its unique approach to measurement, but the primary component is the market capitalization of each company accounting for it. This is derived by multiplying the daily stock price by the total number of shares owned by investors.
Remember that indices require disclosure reports detailing their composition every three or six months.
Reading an index involves observing its growth or decline over time. While a 500-point increase may seem impressive, keep in mind that the gains could be more significant if the index started at a lower base, like 30,000 points as opposed to 300.
Major Stock Market Indices
In the United States, major stock market indices include the Dow Jones, which gathers 30 companies, the S&P 500 consisting of 500 significant companies, and the Nasdaq 100 collecting 100 large non-financial firms.
Moving on to the European front, prominent indexes include the Eurostoxx 50, the DAX 30, the FTSE 100, the CAC 40, and the IBEX 35.
In the Asian market, the Nikkei 225, the SSE Composite Index, the Hang Seng Index, and the KOSPI are remarkable indices.
As for Latin America, key indexes consist of the IPC (Mexico), the Bovespa (Brazil), the Merval (Argentina), the IPSA (Chile), and the MSCI COLCAP (Colombia).
Therefore, you now have a better idea of what stock market indices are, their functions, calculations, and some of their important examples. Happy analyzing!
(Reminder: stock market indices serve as indicators of investors' confidence, business optimism, economic health, and equity investments’ performance. Some indices focus on specific market caps, industries, or types of businesses, while others consist of hundreds of companies.)
- Investors can utilize stock market indices, such as the Nikkei 225, to compare returns, evaluate risk, and create portfolios, as these indicators play a crucial role in various stock exchanges worldwide.
- To take advantage of opportunities in the stock market, investors should pay close attention to major indices like the Dow Jones, S&P 500, Nasdaq 100, Eurostoxx 50, and the Nikkei 225, among others, which provide an overview of the performance of equity investments in different regions.
