National stock indices of Europe and Asia
In this article we bring to your attention a brief overview of national stock indices of the world's leading economies. US stock exchange indices we covered in a previous article, now off to Europe and Asia!
UK stock indices
Let's start with good old England. The main stock index of this country is FTSE 100 (full name - Financial Times Share Index). The mentioning of one of the world's most authoritative financial publications - the Financial Times - in the index's name is not accidental: it was the Financial Times that created the prototype of the FTSE 100 - the FTSE 35 index - in 1935. Moreover, even today the newspaper's analysts are part of the committee that selects companies worthy of inclusion in the index.
As for FTSE 100 index in its modern form, it was first calculated on January 3, 1984. The index is calculated in points, and its value "on its birthday" on January 3, 1984 was decided to be equal to 1000. At present (data as of May 2010), the index value has already exceeded 5000 points, which indicates the strong growth dynamics of the British stock market over the past 25 years.
Needless to say, the number 100 in the name of the index indicates that the FTSE 100 covers one hundred of the country's largest companies. They together account for 70% of the total capitalization of the UK stock market.
German stock indices
The largest economy in the eurozone, the Federal Republic of Germany, with its famous the stock exchange in Frankfurt am Main.. Thirty leading companies listed on this exchange are reflected in the German stock index DAX 30.
The index has been calculated since July 1, 1988: at that time its value was equal to 1000 points. In May 2010, the DAX 30 showed a value close to 6000.
French stock indices
Child Paris Stock Exchange - CAC 40 index - dates back to December 31, 1987. As in the case of other European indices, it started its life with a thousand points, and in May 2010 it was revolving around 3,500.
Let's conclude our review with an introduction to the two most important Asian indices.
Japan stock indices
Tokyo Stock Exchange is considered to be the world's second largest after New York City. NYSE. In Japanese Nikkei index - shares of 225 of the country's leading companies listed on the Tokyo Stock Exchange.
In the past, the index Nikkei 225 was called the Nikkei Dow Jones Average. The obvious similarity to the name of the familiar Dow Jones Industrial Average (DJIA) reminds us that the methodologies used to calculate both indices are absolutely identical. The Nikkei 225 is sixty years old: it has been published since 1950.
Hong Kong stock index
Another important stock exchange in Asia, the Hong Kong Stock Exchange, also has its own Index: Hang Seng. It is calculated by HSI Services Limited. Unlike the above indices, Hang Seng does not have in its name an indication of the number of shares involved in the calculation. It means that this number is not strictly fixed. Currently, the calculation is based on shares of thirty-three companies.
Summary
The general rule: national stock indices fall - national currency falls. This is the "classic" market reaction - as they call it, "according to the textbook". It works well in periods of global economic growth. But there is another type of dependence...
Rule No. 2: When panic and "flight from risk" grips the world's financial markets, all stock indices fall, while gold and so-called "safe haven currencies" rise in value. The main "safe haven currency" is the following Japanese yenThe second most important currency is the US dollar. Such reaction is characteristic for the periods of crisis, when there is uncertainty in the prospects of the world economy and in the future in general. This pattern is highly characteristic of the world financial and economic crisis we are observing, so in real trading today we have to forget about the "classical" reaction for the time being....
However, the crisis is by no means a hindrance for making money on FOREX! On the contrary. You can even catch your "goldfish" in its murky waters. We wish you the same!