As will certainly become clearer in the following lines, the composition of stock indices varies depending on the benchmark being considered. Based on the criterion chosen, an equity index can be:

In addition to being based on these 3 criteria, indexes can also be made up by sector (such as Nasdaq), or by geographic area (such as global and national indexes).

There is also a final type to consider: that of sustainability indexes. These consider securities on the basis of different criteria than economic-financial criteria. They generally group together the stocks of companies considered the best in sustainability and CSR.

On the European stock exchange front, the most popular stock indexes are those of London, Frankfurt, Paris, Madrid and Milan. London’s index is the FTSE 100, Germany’s is the DAX 30, France’s is the CAC 40, Spain’s is the IBEX 35, and Milan’s is the FTSE Mib.

In addition to the major European stock indices, it is also worth mentioning the Asian and American stock indices. To the east we find the Nikkei 225, which is rather broad compared to European peers in that it includes the 225 largest Japanese stocks by market capitalization.

In Asia we then find the Shanghai composite, which takes in all stocks in the Chinese market. It is divided into SSE 380, SSE 180 and SSE 50 depending on the number of companies considered.

Also worth mentioning is the Hong Kong Hang Seng, which consists of 50 companies representing 58 percent of the capitalization of the entire Hong Kong Stock Exchange. Finally, among the Asian stock indexes, one cannot leave out the South Korean KOSPI, which refers to more than 780 companies including Samsung and Hyundai.

The major U.S. stock indexes are 3: Dow Jones, S&P 500 and Nasdaq. The Dow Jones Industrial Average (DOW 30) is composed of 30 stocks but, contrary to what we have seen so far, it does not refer to capitalization of listed companies but to stock prices.

The S&P 500 originated in 1957 at the hands of Standard & Poor’s. Again, the benchmark is the capitalization of the 500 largest U.S. companies: because of its size, it is the leading benchmark stock index in the U.S. markets.

Finally, we have the Nasdaq Composite, which, of all equity indices, is the benchmark for Wall Street tech stocks.