Updated May 17th, 2024 at 17:46 IST

Decoding Top Global Indices: An Overview By Vida Markets Experts

Global indices are a mirror of the world’s market movements, reflecting the level of the economic health of various regions and industries.

Reported by: Digital Desk
A candlestick and line chart on digital, numerical background | Image:Open Source
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Financial markets are woven with a complex net of data, sentiments, and forecasts while indices represent the pulse of this system. 

Global indices are a mirror of the world’s market movements, reflecting the level of the economic health of various regions and industries. Vida Markets experts offer a closer look into some of the most important global indices that dominate financial headlines and are used as benchmarks by investors worldwide. 

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1. Dow Jones Industrial Average (US30)

The Dow Jones Industrial Average, first computed in 1896, is one of the oldest stock indices, which serves as a good indicator of the U.S. industrial sector conditions. Although it incorporates only 30 companies, they are giants in their own business segment, demonstrating structural shifts through their performance. 

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To illustrate, during the tech boom of the late 1990s, the Dow’s movements were a reflection of broader market trends despite its limited scope. Today, it is comprised of both tech giants and traditional manufacturers, depicting a complex yet strong picture of American business. 

2. The Standard & Poor’s 500 (S&P500)

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The S&P 500 is a comprehensive representation of the U.S. markets, exhibiting the performance of 500 large-cap stocks from a wide range of industries. Accommodating approximately 80% of the available market capitalization, this index denotes general economic trends with greater precision. 

For instance, the S&P 500 usually recovers faster during the economic recovery phases after any recession. The annual returns of the S&P 500 can show optimism in the economy, such as the 23.4% increase seen in 2009 after the global financial crisis recovery. 

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3. NASDAQ Composite Index

The index is a broad-based, tech-heavy index consisting of around 3,000 stocks listed on the NASDAQ exchange, including the biggest companies like Apple, Amazon, and Alphabet (Google). Known for its high volatility, NASDAQ is often viewed as a leading indicator of the technology and internet-related sectors. 

When tech stocks are doing well, the index usually registers significant upside movement. To illustrate, at the time of the tech resurgence in the early 2020s, the NASDAQ index often posted remarkable gains that were above other indices showing the ever-increasing role of technology in the global economy.

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4. FTSE 100 

Often called "Footsie" the FTSE 100 includes 100 of the largest public companies by market capitalization listed on the London Stock Exchange. 

The FTSE 100 not only provides a gauge of UK economic performance but also reflects the dynamics of European business due to the multinational nature of its constituents. Industries such as pharmaceuticals, oil, and finance are the main constituents of this index. 

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Following the Brexit vote in 2016, the FTSE 100 showed resilience, with many firms enjoying the benefits of a weaker pound which boosted export-related revenues and their share prices.

5. DAX 

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The DAX contains 30 major blue-chip companies whose shares are traded on the Frankfurt Stock Exchange. The index is made up of German heavyweights like Volkswagen, SAP, Siemens, and Allianz. The composition of the DAX is reviewed quarterly, and the index is weighted by market capitalization, meaning companies with higher market values have a larger impact on the index's movements.

Starting from its launch in 1987, DAX has remained a powerful indicator for German and broader European economic health. 

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Bottom Line

Popular world indices enable investors and traders to get a deeper understanding of the world economy and shifting trends. With Vida Markets, participants can efficiently capitalize on the world's leading global indices under reliable trading conditions. They can also enjoy access to comprehensive market insights and tools, enhancing their trading experience to be both seamless and effective.

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Published May 17th, 2024 at 17:46 IST