Graduates: Know These Financial Market Benchmarks For Interview

When you are at interview with any financial institution you’ll undoubtedly spend some time with a business person additional to interviewing with Human Resource personnel. Whether Buy Side, Sell Side or related sector it is quite likely you will get asked financial market benchmark questions to test your market awareness e.g.

  •  “What’s the USD/GBP FX Rate also known as?”
  •  “What’s main equity market in the US?”
  • “ Where’s the FTSE 100 trading?”

I’d say it is more important to know the existence of the particular market benchmark and its relevance than its current price but if you can do both then great.

If you can know whether global equity markets are at an all time high or if there has been a 10% sell-off over the last two months and understand the basic causes of this then even better. I will provide a monthly summary of “Whats going on in the markets for interview” at the end of each month to help with this.

The following are the main global financial benchmarks. The best summary table for price updates is to be found daily on the front cover of the Financial Times, perhaps worth buying the day before interview, although all available online of course. I’ve add some extra ‘colour’ in brackets as well as a country codes at the beginning of each item for ease of identification.

Stock Markets

  • US: Dow Jones Industrial Average (the best known U.S index of stocks; the average of 30 significant stocks traded on the New York Stock Exchange and the Nasdaq)
  • US: S&P 500 (Standard & Poor’s 500; American stock market index based on the market capitalisation of 500 large US companies)
  • US: Nasdaq Composite ( pronounced “NAS-DAK” ; benchmark index for U.S. technology stocks)
  • UK: FTSE 100 (Index of the 100 largest companies listed on the London Stock Exchange (LSE).Companies often referred to as ‘blue chip’)
  • UK: FTSE All-Share (Index comprising of around 1000 of more than 2,000 companies traded on the LSE; more representative of the wider UK economy)
  • FR: CAC 40 (main stock index for France)
  • GE: DAX (30 of the largest and most liquid German companies)
  • JP:  Nikkei (pronounced “Nick-I”; short for Japan’s Nikkei 225 Stock Average)
  • HK: Hang Seng (40 of the largest companies that trade on the Hong Kong Exchange)

Currencies

  • USD / EUR ( i.e.“Give me a price in Dollar /Euro”; price is $ per EUR)
  • USD /GBP (i.e.“Give me a price in Dollar /Sterling” or “Give me a price in Cable” with Cable being this rate’s nickname. Price/ Rate is $ per £)
  • USD /JPY (i.e.“ Give me a price in Dollar / Yen. Price/Rate is Yen per $)

Commodities

  • Oil (Priced by ‘Dollars per Barrel’. Two types of Oil; Brent from the North Sea and WTI -West Texas Intermediate from the US obviously!)
  • Gold (Priced by ‘Dollars per Ounce’. Gold has been around for 5000 years and is seen as a ‘safe heaven’ investment when markets / the world is in turmoil)

Bonds

  • US Government 10 Year Bond – (i.e. “Give me a price in the 10 year Treasury”. Bonds trade by price e.g. 99.50 but it is the yield/’yield to maturity’ which is important)
  • UK Government 10 Year Bond – (such bonds also known as UK Gilts)
  • GERMAN Government 10 Year Bond – (such bonds also known as BUNDS)
  • JAPAN Government 10 Year Bond – (such bonds also known as JGBS for Japanese Government Bonds)
  • US Government 30 Year Bond – (also known as the Long Bond i.e. “Give me a price in the Long Bond in 20 Million”. The world’s benchmark bond and leads other bond markets)

Interest Rates

  • US: Fed Funds – (a key overnight US borrowing rate between banks which can be influenced by the US Federal Reserve – like the Bank of England to you and me.)
  • US: US 3 Month Treasury Bills – (another significant US rate but not as crucial as Fed Funds)
  • EU: Euro 3 month LIBOR – (the London Interbank Offered Rate i.e. the 3 month period borrowing and lending rate for Euro currency )
  • UK: *UK 3 month LIBOR – (the London Interbank Offered Rate i.e. the 3 month period borrowing and lending rate for Sterling )

*Lots of recent scandal over banks manipulating this LIBOR rate in last 6 months.

If you get asked anything outside of this you would be very unlucky.

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About Paul McCormick

Paul McCormick is the founder of Opening City Doors and is a Financial Market Specialist having worked for several leading Investment Banks and financial technology institutions additionally.He therefore provides a unique insight, and unusually broad perspective, into the opportunities available in London Financial Markets and related sectors and how to launch your career in the ‘City’.