share market indexes
A share market index basically summarises the value and
a group of companies in the share market. The two most
common ones on
the Australian market are the Top
index (S&P/ASX 200, or XJO), and the All
(actually the top 500 stocks, or XAO). More information
about these at
information about our
share market indexes at www.asx.com.au.
The market indexes mentioned above, and described at
right, are known
indexes. There are other types of indexes,
Australia we use the GICS system to classify companies
their principal activities and to allocate them to a
(more about GICS below).
Australia's Top 200 stocks (the constituents of the
XJO index) are allocated to one of eleven* GICS
sectors, so that investors can
more easily see the performance of a company relative to
it's own sector index
(ie. relative to it's peers, and to similar companies in
The eleven* GICS
are (see GICS details below):
In addition to the above official GICS sectors, some
organisations also refer to the following GICS
- Consumer Discretionary
- Consumer Staples
- Health Care
- Information Technology
- Telecommunication Services
* - Note that for a number of years there were only 10
sectors, but this was revised effective 31 August 2016 to
break out the
REIT sub-sector from within the Financials sector, to be a
its own. See an official announcement from S&P Dow
- Australian REITs
- Financials excluding A-REITs
- Metals and Mining
share market indexes
See more information about the indexes (and index
rebalancing news) at the Australian Market Index website, and
also at S&P Dow Jones Indices.
and index rebalancing
From time to time, the list of stocks in each share market
revised. Remember that there are rules that determine
which stocks are
eligible for listing in each index, and as time goes by,
eligibility of any one stock can change.
The most common way that this
change comes about is due to the daily share market
actions and the
capitalisation of each stock. If a stock in the Top 200
index suffers a
price fall, then it might end up falling off the bottom of
the list of
Company mergers can also trigger removal from an index.
Standard & Poors manages the rules for indexes, and
index constituent list each quarter or half-year
(depending on which
index). See the recent announcements on index rebalancing here.
Index rebalance announcements are made by S&P on the
of March, June, September and December. The XJO is
quarter, and the S&P/ASX 300 twice yearly in March and
- Information about the Global
Classification Standard coding system in
the various indexes and security groupings used in the
market. It can
be very beneficial to understand how GICS codes are
because it often happens that like-coded stocks move
together in the
that changes were made (effective after 31 August
2016) to more
clearly differentiate Real Estate Investment Trusts
allocating them to their own sector - see details at S&P.
The term market
has been used for many years to refer to a stock
market index. Charles
Dow referred to the major market indexes as the market averages
his day (late 1800s).
Also see Robert's information on Dow
These days it is acceptable to refer to a market
index as a market
Which stocks are in each index?
for Toolbox Members ***
Robert's monthly updated lists of
stocks are in each index?"
are available here for download.
These lists are in CSV format to download
for use in
About the Australian indexes
capitalisation - This is a measure of the "size"
company. It is simply calculated by multiplying the
current share price
by the number of shares on issue. On the Australian
market, the largest
company by market capitalisation is currently BHP. We
produce a list of all stocks on the market sorted by
Understanding this idea will help to understand the
about the market indexes.
note about "top stocks"
- When we say that an index comprises the "top stocks"
in our market,
it does not mean each and every stock within the list of
For example, the XJO
index (S&P/ASX 200) comprises a selection of the
our market by capitalisation, as at the latest
for the XJO). Any stock which does not qualify for
in this index (eg. due to not enough liquidity) is
excluded from the
index. So, the "Top 200" index might be a selection of
200 stocks from
top 300 or so on our market.
- We often hear a reference to the Australian share
market without any
other qualification. On some radio stations and some TV
will be a reference to the S&P/ASX 200 index, while
a reference to the All Ordinaries index. Seesome details
about this in
the following paragraphs.
See charts of the Australian indexes
Indexes - Composition (download)
Some common questions:
- How are all the ASX
sub-indexes, made up?
Which stocks are in which index?
How does the S&P/ASX 200 index (XJO)
compare to the All
Ordinaries index (XAO)?
and to the S&P/ASX 300 (XKO)?
What about the S&P/ASX Mid-cap 50 (XMD)?
The 2-page PDF file "ASX
- Composition" gives a good
lists some of the stocks in each index.
XJO - S&P/ASX 200 index
- This is basically the top 200 stocks in the Australian
That is, the top 200 by market capitalisation. It is the
for the Australian equity market. The S&P/ASX 200 is
the S&P/ASX 100 plus an additional 100 stocks. Source
See more information at www.marketindex.com.au/methodology.
XAO - All Ordinaries index
- This is basically the top 500 stocks in the Australian
The index is made up of the weighted share prices of about
500 of the
largest Australian companies. Established by ASX at 500
January 1980, it is the predominant measure of the overall
of the Australian share market. The companies are weighted
their size in terms of market capitalization (total market
value of a
company's shares). Source - www.asx.com.au.
See more information at: www.marketindex.com.au/methodology.
The VIX Volatility index has existed in
the US for quite some time. It is basically a measure of
the amount of
fear in the share market. Introduced in 1993, the Chicago
Board Options Exchange (CBOE) Market Volatility
is regarded as a "key
measure of market expectations of near-term volatility
conveyed by S&P 500
stock index option prices"
(source and more details: www.cboe.com). Other volatility
indexes index, including the relatively new Australian market VIX.
The ICB system (Industry
Classification Benchmark) is a classification system
to the GICS system, and uses a system of 10 industries,
into 20 supersectors, which are further divided into 41
then contain 114 subsectors (see Wikipedia for details). This
system is not in widespread use in Australia. The 10
- Oil & Gas
- Basic Materials
- Consumer Goods
- Health Care
- Consumer Services
and stock exchanges
The orderly trading of shares, currencies, futures
or commodities happens in a market,
but more specifically in an exchange.
The two columns at left focus on aspects of the
Australian share market, and some of the indexes in the
the globe there are many other markets / exchanges -
some are share
some commodity markets - and across those markets there
are many, many
different indexes that summarise the performance of a
selected group of
stocks, or commodities.
Some major market indexes
time to time you might here something on the radio or TV
stock market performance. The following might help you
little more about what they are talking about.
- Some of the stock market reports (in Australia)
loosely refer to
"Wall Steet". This is usually a reference to the Dow
Average index (see more below).
- This is usually a reference to the Australian Share
futures contracts (the ASX SPI 200 Index Futures),
and the value is often quoted in the mornings before the
market opens. Many people suggest that it is an
indication of the
likely opening level of the Australian market. However,
in this regard
it is not very useful or helpful for the average retail
Here is a list of some of the more closely watched
Jones Industrial Average
(DJIA) - This index is often just referred to as "the
Dow" and is
comprised of only 30 major stocks from the US market
(from the - NYSE -
New York Stock Exchange and the Nasdaq). See more details.
Jones Transportation Average (DJTA) - This
represents twenty key transporation companies in the
US. See more details.
500 index - This is a broader market index
major US stocks from the NYSE and Nasdaq. See
Russell 2000 index - This is a small-cap
index, managed by the Russell Investments company. See more details.
index - This is an index representing a selection of
and is managed by Nasdaq OMX.
- German DAX
- French CAC-40
- London FTSE
- New Zealand NZ50
- Hong Kong
major stock exchanges
Here is a list of just some of the major stock
exchanges around the world, with links to more details
For a longer list of stock exchanges around the
world, see Wikipedia.org.
Some major commodity exchanges
Here is a list of some of the major comodities
exchanges around the world, with links to more details
mentioned in the left hand column, market indexes need
to be rebalanced
from time to time. When the constituent stocks in a
share index fall
out of favour, and the share price falls, the market cap
falls and can
end up with a low market cap that no longer qualifies to
be in the
There are rules for rebalancing market indexes,
and the rules vary from market to market, and from index
For example, the US Russell 2000 index is
rebalanced annually as at 30 June (see more details).