The Nikkei 225 closed the day on Tuesday, 6 December with a slight gain of 0.34% to 27,915.59 points. The Nikkei 225 had a high of 27,934.07 points and a low of 27,698.31 points. The trading range for the Nikkei 225 between its high and low (high/low) on the day was 0.84%.
Taking into account the last seven days, the Nikkei 225 is down 0.4%, so on a year-on-year basis it is still down 5.37%. The Nikkei 225 is 4.83% below its year-to-date high (29,332.16 points) and 12.94% above its year-to-date low (24,717.53 points).
Nikkei 225 closes: gaining ground on 6 December
What is a stock market index and what is it for?
A stock market index is an indicator that shows how the price of a given. Assets is changing, and therefore requires data from several companies or sectors in a fragment of the market.
These indicators are mainly used by stock exchanges in different countries and each of them can be composed of companies with specific characteristics such as having a similar market capitalisation or belonging to the same type of industry, also, there are some indices that only consider a handful of shares to determine their value or others that consider hundreds of shares.
Nikkei 225 closes: gaining ground on 6 December
Stock indices serve as an indicator of confidence in the stock market, business confidence, the health of the national and global economy, and the performance of a company’s equity investments. Generally, if investors lack confidence, stock prices would tend to fall.
They also function to measure the performance of an asset manager and allow investors to compare return and risk; to measure opportunities in a financial asset or to build portfolios.
These types of indicators began to be use in the late 19th century after journalist Charles H. Dow closely analysed how company stocks tende to rise or fall together in price. So he created two indices: one containing the 20 most important railroad companies. As it was the most important industry at the time, as well as 12 stocks of other types of businesses.
How are they calculate and how to read them?
Each stock index has its own way of being measure, but the main component is the market capitalisation of each constituent firm. This is derive by multiplying the day’s value of the bond on the relevant exchange by the total number of shares outstanding in the market.
Firms liste on the stock exchange are oblige to submit a balance sheet of their composition. Such a report must be publishe every three or six months, as appropriate.
