An index is made up of a group of companies and can be used to work out how well a market is doing.

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Video transcript

Indices are tools used to describe and measure the value of financial markets.

Most economies have well established indices such as London’s FTSE100, THE S&P 500 in New York or the NIKKEI 225 based in Tokyo.

Each index groups together the share prices of a set number of companies to provide a snapshot of how that market is doing.

Indices are useful because they allow investors to compare the current value of different assets, as well as their past performance.