Major Stock Indices In The World

By Author: george thomas
Total Articles: 14
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The index is the method that is used to measure the performance of a class of assets. It is a standardised way to know about shares traded on a stock exchange. The plural form of index is known as indices. The indices give traders exposure to the economic world with a single position. Several indexes are traded on major stock exchanges like London Stock Exchange.

S&P 500 and FTSE 100 are the indices that investors most trade. Indices could be broad-based, capturing the entire market, or short based. The index methodology is used for many factors related to the financial markets. For example, they help traders get an idea of interest rates, inflation and other factors affecting the trade.

Calculation of Indices

The market capitalisation of companies is used for the calculation of indices. Some companies also use a weighted average to have a high weight in the market with the increased share price. This leads to a greater effect on the worth of the indices.

Index = present-day total free float capped market capitalisation/ previous ...
... day total free float capped market capitalisation X index value of the previous day

Stock Indices

Every country has a number of indices that are traded online or traditionally. But here, we have discussed some of the major stock indices that are traded globally. Below is the list of major stock indices:-

NASDAQ-100

With an average volume of 5.737 bln. NASDAQ is the major stock indices of the U.S. National Association of Securities Dealers Automated Quotations (NASDAQ), calculated in 1995, has grown and achieved a high worth in the financial markets. Developed over the years and has growth stocks as proof of attainment. It has high tech shares of 100 US companies with 103 shares traded over large and mid-cap firms. Primarily working in software and electronics, NASDAQ is an excellent choice to invest in indices.

It has a market capital of $31.78 billion as of August 2021. Using the capitalisation weighted method for calculation of company index, they trade in major industries. Apple, Alphabet (Google), Microsoft, Tesla, Facebook and Amazon are the companies that have their stocks on NASDAQ.

S&P 500

Standard and Poor's Composite 500 (S&P 500) has a market capital of 36.32 trillion in June 2021. Using the free-float capitalisation method, it is the America based stock indices. With its first calculation in the year 1957, S&P 500 has increased its worth in the financial market. Today it has an average volume of 4.996 bln. and is 80% of the U.S. market capitalisation.

It fluctuates continuously, making it a choice world over, as these swings affect the share price of other countries trading in indices. The indices include Apple, Microsoft. Google, Johnson & Johnson, Visa and Berkshire Hathaway etc.

Hang Seng Index

Coded as HSI, Hang Seng Index is the major stock indices of Hong Kong. Being the most potent index of Southeast Asia, HSI has 65 % of the total market capitalisation in Asia. With an average volume of 2929 bln. It was first calculated in 1969. HSI uses the capitalisation weighted method for index calculation. It has firms like HSBC, China Construction Bank and Bank of China etc.

HSI has four sub-indices :

Industrial Hang Seng Commerce & Industry
Investment Hang Seng Properties
Financial Hang Seng Finance
Hang Seng Utilities dealing in Energy Sector

FTSE 100

FTSE 100 stands at a market capitalisation of $1.814 trillion in August 2021. It is a popular index traded on the London Stock Exchange. A UK based indices FTSE 100 has an average volume of 905.89 mln. First calculated in 1984, FTSE 100 has one hundred shares with the London Stock Exchange. Using the weighted capitalisation method, the index covers 80% of the London Stock Exchange market. Royal Dutch Shell and B.P. are some of the companies index dealing in FTSE 100.

Dow Jones Industrial Average

Dow Jones index is a known index of the USA. It was first calculated by Charles Dow in 1884. Being coded as DJI, the average volume of the indices is 393.46 mln. Including 30 companies listed on the U.S. stock exchange, Dow Jones uses the price-weighted method of calculation. Thus, it is the oldest indices that traders of the corporate market follow.

Dow Jones has a market worth of $8.33 trillion in 2019 has been growing ever since its inception. An indicator of the U.S. industrial sector dynamics, Dow Jones, includes companies such as Coca Cola, IBM, Intel and Microsoft, etc.

Russell 2000

Coded as RUT, Russell 2000 is the US-based index that trades in small companies. With an average volume of around 49.965 mln, the index accounts for 90% of the total small capital companies listed on the American stock exchange. It uses the free float capitalisation weighted method for its calculation of the index. Being a source of in-depth analysis of the small companies, RUT is the most traded index of the small firms.

It was first calculated in 1984 and is opposite of S&P 500 and Dow Jones.

Euro STOXX 50

SX5E is a Eurozone index with the fifty largest companies using the free-float market capitalisation weighted method. It includes the 19 economic sectors of the Eurozone. Calculated in 1998, SX5E is measured of five E.U. currencies: the U.S., Euro, Canadian dollars, British pound sterling, and Japanese yen. With an average volume of 39.468 mln, France and Germany are the most traded in Euro STOXX 50. It accounts for 70% of the market capitalisation of indices.

It involves companies such as Deutsche Post, BMW, Volkswagen and AXA etc.

Conclusion

Indices are a vital part of the financial market; trade is incomplete without index calculations. They provide the investor with in-depth information on the interest rates, inflation, and small market factors. They measure in groups and generate an idea for the trader for investment with a single position. Dow Jones, FTSE 100, NASDAQ, S&P 500 and Nikkei 225 are the significant five indicators of the world's economy.

These are useful for a good understanding of the trading market and have a deep knowledge of stocks. Helping investors in analysis and of the different investments of the market. Providing exposure to the global market, indices are the best to trade with a single position.