After a rocky start, global stock indexes recovered a bit on Friday. The most notable change was in the Shanghai Index, down nearly 50%. This is a reflection of a slowdown in China and other Asian economies. Meanwhile, equity markets in resource-rich countries fell by nearly 40%, wiping out gains from the last five years. Only the Russian stock market rose. The chart below shows how the major global stock indexes fared during this period.
Global stock indexes are a popular choice for investors in recent years, as they provide a way to track the entire stock market. The problem with tracking individual stocks is that it’s too complex, so indexes are built by using a representative sample of the entire market. This method makes global stock indexes a valuable base for analysis and benchmarking.
Global indices are calculated according to a specific formula approved by an index committee. They use weighted average mathematics to calculate the values of the constituent stocks. While some began as price-weighted indices, the majority now use the market capitalization method. Some modern indices are also free-float weighted, which means that they exclude promoter holdings.
The COVID pandemic has affected stock indexes globally, with investors avoiding the stock markets in countries affected by the disease. However, recent news has raised hopes that a COVID vaccine could be on the horizon. The arrival of the vaccine is likely to make investors feel safer, and it’s possible that stock indexes will rebound significantly in the first quarter of 2021.
On Tuesday, US stock indexes were heading for a higher open. Traders waited for corporate earnings reports and economic reports later in the day. However, major stock indexes in Hong Kong, Paris, and Tokyo dropped. Traders were also anxiously awaiting the new details on Trump’s economic agenda.
As a result, this study provides practical information to investors and opens up avenues for further study. This is especially useful for postgraduate students studying economics, finance, and accounting. So, we encourage researchers to continue to investigate these areas in the future. You might even be able to use these results as a case study!