Equity indices, also referred to as stock indices, function as crucial indicators for specific segments of a stock market, assessing the value of selected stocks within their respective categories. These indices can represent an entire stock market, like NASDAQ, or a group of the largest companies in a country, such as the American S&P 500, the British FTSE 100, or the Japanese Nikkei 225.
The primary objective of these indices is to reflect the overall direction of a stock market or the general economic performance of a nation. However, they can be significantly influenced by substantial movements of specific companies or sectors within the market.
The weight assigned to each stock index from its underlying basket of stocks varies depending on the index’s methodology. Two common methods for calculating this weight are price weighting and capitalization weighting.
Let’s delve into some well-known equity indices and their categories:
Price Weighted Indices: The Dow Jones (US30) and Nikkei 225 (Japan225) belong to this category.
Capitalization Weighted Indices: Examples of capitalization weighted indices include the FTSE 100 (UK 100), ASX 200 (Australia 200), Hang Seng Index (Hong Kong 50), DAX (Germany 30), CAC 40 (France 40), and IBEX35 (Spain 35).
Here is a closer look at some popular equity indices:
S&P 500 (US500): Introduced by Standard & Poor’s Financial Services LLC in 1957, the S&P 500 serves as a leading indicator of US equities, covering approximately 75% of the American equity market by capitalization.
ASX 200 (AUS200): This market-capitalization weighted index represents stocks listed on the Australian Securities Exchange, one of the world’s top 15 exchange groups in terms of average daily turnover.
Nikkei 225 (JP225): Also known as Nikkei, this stock index represents the Tokyo Stock Exchange, the world’s third-largest stock exchange by market capitalization.
Hang Seng Index (HK50): The Hang Seng Index is a market capitalization-weighted index tracking the 50 largest companies listed on the Hong Kong Stock Exchange, Asia’s second-largest exchange.
FTSE 100 (UK100): Comprising the 100 companies with the highest market capitalization listed on the London Stock Exchange, the FTSE 100 serves as a significant benchmark for the UK stock market.
NASDAQ 100 (US100): The NASDAQ 100 is a subset of the broader NASDAQ Composite index and includes 107 equity securities issued by the most influential non-financial companies listed on the NASDAQ Stock Exchange.
DJIA (US30): As the second-oldest stock market index in the US, DJIA tracks the performance of 30 major American companies during a standard trading session, calculated using the DJIA Divisor.
DAX (GER40): Representing the 40 major companies trading on the Frankfurt Stock Exchange, DAX is considered a blue-chip index known for its quality and profitability.
CAC 40 (FRA40): CAC 40 comprises the top 40 companies in terms of market capitalization among the 100 highest-valued stocks traded on Euronext Paris, the second-largest European exchange.
| Index | Market | Minimum Spread (pips) | Minimum Spread (value) | Normal Margin | Increased Margin | Minimum Deal Size | Max Exposure |
|---|---|---|---|---|---|---|---|
| Australia 200 | Indices – Australia | 351 | 3.51 | 2% | 4% | 0.07 | 1000 |
| Brazil 60 | Indices – Brazil | 51 | 51 | 4% | 8% | 0.06 | 97 |
| China A50 | Indices – China A50 | 6.3 | 6.3 | 4% | 8% | 0.09 | 180 |
| China SSE | Indices – China SSE | 156 | 1.56 | 5% | 10% | 3 | 220 |
| China SZSE | Indices – China SZSE | 5.31 | 5.31 | 5% | 10% | 0.95 | 68 |
| Dubai Index | Indices – Dubai | 417 | 4.17 | 2% | 4% | 0.24 | 2200 |
| Europe 50 | Indices – Euro | 325 | 3.25 | 0.5% | 1.5% | 0.18 | 1000 |
| FANG+ | Indices – US FANG+ | 395 | 3.95 | 5% | 5% | 0.07 | 300 |
| France 40 | Indices – FR,NL | 270 | 2.7 | 0.5% | 1.5% | 0.11 | 600 |
| Germany 40 | Indices – Germany | 2.4 | 2.4 | 0.5% | 1.5% | 0.05 | 270 |
| Greece 20 | Indices – Greece | 1243 | 12.43 | 0.5% | 1.5% | 0.08 | 41 |
| Hong Kong 50 | Indices – Hong Kong | 20.7 | 20.7 | 1% | 3% | 0.34 | 190 |
| India 50 USD | Indices – India | 4.41 | 4.41 | 2% | 4% | 0.06 | 100 |
| Italy 40 | Indices – Italy | 16.3 | 16.3 | 0.5% | 1.5% | 0.05 | 150 |
| Japan 100 | Indices – Japan100/400 | 62 | 0.62 | 0.5% | 1.5% | 54 | 300000 |
| Japan 225 USD | Indices – Japan225 | 28.4 | 28.4 | 0.5% | 1.5% | 0.05 | 150 |
| Japan 225 Yen | Indices – Japan225 | 13.5 | 13.5 | 0.5% | 1.5% | 3.5 | 21000 |
| Japan 400 | Indices – Japan100/400 | 6.3 | 6.3 | 0.5% | 1.5% | 2.8 | 33000 |
| Korea 200 | Indices – South Korea | 13 | 0.13 | 4% | 8% | 1400 | 9100000 |
| Mexico 35 | Indices – Mexico | 41.6 | 41.6 | 1% | 2% | 0.1 | 750 |
| Netherlands 25 | Indices – FR,NL | 14 | 0.14 | 0.5% | 1.5% | 1.1 | 5700 |
| NIFTY Bank | Indices – India Banks | 10.13 | 10.13 | 2% | 4% | 1.8 | 900 |
| Saudi All-Share Index | Indices -Saudi Arabia | 1434 | 14.34 | 2% | 4% | 0.16 | 790 |
| Singapore 25 | Indices – Singapore | 14 | 0.14 | 2% | 4% | 1.8 | 10000 |
| South Africa 40 | Indices – S. Africa | 29.3 | 29.3 | 4% | 8% | 0.19 | 23 |
| Spain 35 | Indices – Spain | 278 | 2.78 | 0.5% | 1.5% | 0.07 | 460 |
| Swiss 20 | Indices – Switzerland | 4.05 | 4.05 | 0.5% | 1.5% | 0.07 | 190 |
| Turkey 100 | Indices – Turkey | 585 | 5.85 | 4% | 8% | 6.8 | 37 |
| UK 100 | Indices – UK | 273 | 2.73 | 0.5% | 1.5% | 0.07 | 500 |
| US 2000 | Indices – US30/100/500/2000 | 106 | 1.06 | 0.5% | 1.5% | 0.6 | 1200 |
| US 30 | Indices – US30/100/500/2000 | 5 | 5 | 0.5% | 1.5% | 0.06 | 140 |
| US 500 | Indices – US30/100/500/2000 | 80 | 0.80 | 0.5% | 1.5% | 0.29 | 1000 |
| US Tech 100 | Indices – US30/100/500/2000 | 3.3 | 3.3 | 0.5% | 1.5% | 0.1 | 310 |
| USDX | Indices – Dollar Index | 3.2 | 0.032 | 1% | 3% | 9.7 | 49000 |
| VIX | Indices – VIX | 15.5 | 0.155 | 2% | 4% | 31 | 13000 |