Global Stock Indexes and ETFs

Global Stock Indexes and ETFs

Global stock indexes provide investors with an overview of global stock markets. They are based on market capitalization and are highly correlated to other popular global benchmarks. The indexes also allow investors to customize their exposure to certain sectors or countries. Some of these indexes are also available as exchange-traded funds (ETFs).

This year has been a volatile one for global stock averages. A trade dispute between the United States and China has kept investors on edge. Fortunately, in February, a “phase one” trade agreement was reached. Then, in March, a coronavirus outbreak was discovered in China and quickly spread worldwide. As a result, the world’s stock market has been in decline for most of the year.

Global stock indexes provide investors with a snapshot of the global economy. The S&P 500, for example, includes component companies from virtually every region and business sector. This gives investors a broad picture of the risk appetite of the global economy. This is a good place to start if you are a long-term investor. But if you’re trading on a short-term basis, you’ll need to monitor regional indexes as well.

Global indices are created using an approved formula for calculating their index value. Many indices began as price-weighted indices, but over time, they have switched to market cap-weighted indices. In addition, modern indices are free-float weighted, meaning they exclude promoter holdings.

In contrast, COVID-19 cases have a negative correlation with global stock indexes, indicating that investors recognize the long-term consequences of an epidemic. The effects of COVID-19 on the global stock indexes have been magnified by the epidemic, which has affected the international economy. Moreover, a global lockdown caused a massive drop in global indexes. These events contributed to higher unemployment and lower levels of consumption.


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