Stock indices

About the market

Indices are an average indicator of the value of certain shares of companies. For example, the DAX 30 index includes shares of 30 of the most famous companies listed on the Frankfurt Stock Exchange. Stock indices are essential for the dynamics of markets and the economy as a whole. Register an account to invest in major indices using Contracts for Difference (CFDs).

What are indices

Indices are a quoted measure of the performance of a group of shares from an exchange.

The benefits of stock indices and how to trade them?

By measuring the average value of an exchange’s leading stocks, an index can indicate how economic sectors are fairing. Stock indices then represent a benchmark against which a stock’s performance may be measured. The index itself, however, is not a tradeable asset. Instead, one may invest in a derivative – a fund, option or future – that tracks the index’s value. But first, one must fully understand what an index is.

How are indices calculated?

Different indexes are derived in different manners. These are based on two main parameters – how the measured stocks are selected and how the average is derived. An index’s stock composition may be determined based on a company’s market capitalisation, its stock value or by a committee and at its sole discretion. Once those stocks are selected, the index value can be computed based on a simple or weighted average, for example. Now that we understand what indices are, let’s take a look at a few.

Which index CFDs can I trade at Anova

TA-35 Index is an Israeli stock market index computed by the Tel Aviv Stock Exchange that lists the largest 35 companies in the TA-125 Index. The index was expanded on February 12, 2017 to include 35 instead of 25 stocks, in an attempt to improve stability and therefore reduce risk for trackers and encourage foreign investment. The index currently has 35 components, all of which are based out of Israel

The United States Oil Fund (NYSE Arca: USO) is an exchange-traded fund (ETF) that attempts to track the price of West Texas Intermediate Light Sweet Crude Oil. It is distinguished from an exchange-traded note (ETN) since it represents an ownership claim on underlying securities that the fund has packaged. USO invests in oil future contracts that are traded on regulated futures exchanges The United States Oil Fund was founded in April 10, 2006 by Victoria Bay Asset Management, now known as United States Commodity Funds, and the American Stock Exchange. The fund opened on its first day of trading at $68.25 per share. USO's investment objective is to include the changes in percentage terms of its units' net asset value in its evaluation of the changes in percentage terms of the spot price of light, sweet crude oil as measured by its price on the New York Mercantile Exchange. Its performance is determined by the price of oil through its oil futures contracts.

he Standard and Poor's 500, or simply the S&P 500, is a stock market index tracking the performance of 500 large companies listed on stock exchanges in the United States. It is one of the most commonly followed equity indices. As of December 31, 2020, more than $5.4 trillion was invested in assets tied to the performance of the index. The S&P 500 index is a free-float weighted/capitalization-weighted index. As of September 30, 2021, the nine largest companies on the list of S&P 500 companies accounted for 28.1% of the market capitalization of the index and were, in order of weighting, Apple, Microsoft, Alphabet (including both class A & C shares), Amazon.com, Meta Platforms, Tesla, Nvidia, Berkshire Hathaway and JPMorgan Chase. The components that have increased their dividends in 25 consecutive years are known as the S&P 500 Dividend Aristocrats.: 25  In 2017, companies in the index derived on average 72% of their revenue in the United States. The index is one of the factors in computation of the Conference Board Leading Economic Index, used to forecast the direction of the economy. The index is associated with many ticker symbols, including ^GSPC, INX, and $SPX, depending on market or website. The S&P 500 is maintained by S&P Dow Jones Indices, a joint venture majority-owned by S&P Global, and its components are selected by a committee. Index funds, including mutual funds and exchange-traded funds (ETFs), can replicate, before fees and expenses, the performance of the index by holding the same stocks as the index in the same proportions. ETFs that replicate the performance of the index are issued by The Vanguard Group (NYSE Arca: VOO), iShares (NYSE Arca: IVV), and State Street Corporation (NYSE Arca: SPY), and the most liquid based on average daily volume is currently (NYSE Arca: SPY), although SPY has a slightly higher expense ratio of 0.09% compared to just 0.03% for VOO and IVV. Mutual funds that track the index are offered by Fidelity Investments, T. Rowe Price, and Charles Schwab Corporation. Direxion offers leveraged ETFs that attempt to produce three times the daily result of either investing in (NYSE Arca: SPXL) or shorting (NYSE Arca: SPXS) the S&P 500 index.

The FTSE MIB (Milano Indice di Borsa) (the S&P/MIB prior to June 2009) is the benchmark stock market index for the Borsa Italiana, the Italian national stock exchange, which superseded the MIB-30 in September 2004. The index consists of the 40 most-traded stock classes on the exchange. The index was administered by Standard & Poor's from its inception until June 2009, when this responsibility was passed to FTSE Group, which is 100% owned by the Borsa Italiana's parent company London Stock Exchange Group.

The S&P/ASX 200 index is a market-capitalization weighted and float-adjusted stock market index of stocks listed on the Australian Securities Exchange. The index is maintained by Standard & Poor's and is considered the benchmark for Australian equity performance. It is based on the 200 largest ASX listed stocks, which together account for about 82% (as at March 2017) of Australia's sharemarket capitalisation. The ASX 200 was started on 31 March 2000 with a value of 3133.3, equal to the value of the All Ordinaries at that date. The ASX 200 reached 6,000 points for the first time on Thursday 15 February 2007. On 22 December 2017, the ASX 200 was 6,069. The ASX 200 crossed the 7,000 points level for the first time on 16 January 2020. Bloomberg, CNBC, Yahoo! Finance and Wikinvest use respectively the symbols AS51 .AXJO ^AXJO and AXJO to refer to this index. The ASX 200 webpage offers a Sharemarket game as an educational tool with $50,000.00 AUD virtual cash The ASX 200 is capitalization-weighted, meaning a company's contribution to the index is relative to its total market value i.e. share price multiplied by the number of tradeable shares. The ASX 200 is also float adjusted, meaning the absolute numerical contribution to the index is relative to the stock's value at the float of the stock. Although the calculation starts with a sum of the market capitalisation of the constituent stocks, it is intended to reflect changes in share price, not market capitalisation. Therefore, a fudge factor called the "Divisor" is used to ensure that the index value only changes when stock prices change, not whenever market capitalisation changes. For example, if a company increases its market capitalisation by issuing new shares, the Divisor is adjusted so that the ASX 200 index value does not change.

• Market capitalization: A stock's weight in the index is determined by the float-adjusted market capitalization of the stock. This is a function of current index shares, the latest available stock price and the Investable weight factor (IWF). The IWF represents the float-adjusted portion of a stock's equity capital. Therefore, any strategic holdings that are classified as either corporate, private or government holdings reduce the IWF which, in turn, results in a reduction in the float-adjusted market capital. Shares owned by founders, directors of the company, trusts, venture capitalists and other companies are also excluded. These are also deemed strategic holders, and are considered long-term holders of a stock's equity. Any strategic shareholdings that are greater than 5% of total issued shares are excluded from the relevant float. • Liquidity: The trading volume in terms of dollar value and the number of transactions must exceed at least 0.025% of the sum of all eligible securities' trading volume. To ensure that no single company dominates trading, they are capped at a maximum of 15% for value, volume and transactions. • Listing: Only stocks listed on the Australian Stock Exchange will be considered for inclusion in any of the S&P/ASX indices.

The AEX index, derived from Amsterdam Exchange index, is a stock market index composed of Dutch companies that trade on Euronext Amsterdam, formerly known as the Amsterdam Stock Exchange. Started in 1983, the index is composed of a maximum of 25 of the most frequently traded securities on the exchange. It is one of the main national indices of the stock exchange group Euronext alongside Brussels' BEL 20, Paris's CAC 40 and Lisbon's PSI-20 IBEX 35 The IBEX 35 (IBerian IndEX) is the benchmark stock market index of the Bolsa de Madrid, Spain's principal stock exchange. Initiated in 1992, the index is administered and calculated by Sociedad de Bolsas, a subsidiary of Bolsas y Mercados Españoles (BME), the company which runs Spain's securities markets (including the Bolsa de Madrid). It is a market capitalization weighted index comprising the 35 most liquid Spanish stocks traded in the Madrid Stock Exchange General Index and is reviewed twice annually. Trading on options and futures contracts on the IBEX 35 is provided by MEFF (Mercado Español de Futuros Financieros), another subsidiary of BME.