Financial market indices are benchmarks that track the performance of a group of stocks, bonds, or other securities, representing a specific segment of the market. They provide investors with a snapshot of market trends, enabling them to gauge the overall economic health and make informed investment decisions.

Some of the most well-known indices include:

Stock Market Indices – Such as the S&P 500 (U.S. large-cap stocks), Dow Jones Industrial Average (DJIA) (30 major U.S. companies), and Nasdaq Composite (tech-heavy stocks).

Global Indices – Like the FTSE 100 (UK), Nikkei 225 (Japan), and DAX (Germany).

Sector-Specific Indices – Such as the NASDAQ Biotechnology Index or S&P 500 Energy Sector.

Bond Indices – For example, the Bloomberg Barclays U.S. Aggregate Bond Index, which tracks the U.S. bond market.

Indices serve multiple purposes:

Performance Measurement – Investors compare their portfolio returns against relevant indices.

Passive Investing – Many ETFs and index funds replicate indices like the S&P 500.

Economic Indicators – Movements in indices reflect investor sentiment and economic conditions.

Overall, financial market indices play a crucial role in trading, investing, and economic analysis by providing a standardised way to assess market performance.