S&P/ASX 200

Definition

The S&P/ASX 200 is a stock market index that serves as a benchmark for the performance of the Australian equity market. 

What is the S&P/ASX 200?

The S&P/ASX 200 includes the 200 largest companies listed on the Australian Securities Exchange (ASX) based on their market capitalisation, which represent a diverse range of industries and sectors.  Companies with higher market capitalisations have a greater influence on the index’s movements.

The index serves as a benchmark for investors, fund managers, and analysts to measure the overall performance of the Australian equity market. Changes in the index reflect shifts in investor sentiment, economic conditions, and corporate performance, providing insights into market trends and dynamics.

The S&P/ASX 200 provides key indicators of market health and sentiment, including:

• Index level: The numerical value of the index at any given point in time.
• Index performance: The percentage change in the index level over a specified period.
• Market breadth: The number of advancing and declining stocks within the index.

The index is used as the basis for various investment products, including index funds, exchange-traded funds (ETFs), and derivatives. These products allow investors to gain exposure to the broader Australian equity market or specific sectors represented in the index.

Changes can have significant implications for investors, fund managers, and the broader economy. A rising index may signal optimism and attract investment, while a declining index may indicate concerns.

Example of the S&P/ASX 200

If the S&P/ASX 200 index increases by 2%, it reflects positive sentiment in the Australian equity market and indicates overall growth in the largest 200 companies listed on the Australian Securities Exchange (ASX).