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MARKET OUTLOOK - Global & Local


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Australian shares are set to open higher, perhaps resetting its record high, as shares on Wall Street hovered near record highs ahead of the US May CPI report on Friday AEST.

 

ASX futures were up 10 points or 0.1 per cent to 7314 near 7am AEST. The currency slipped.

 

 

 

AUD .... -0.2% to 77.37 US cents

Bitcoin on bitstamp.net -1.5% to $US33,553

On Wall St: Dow -0.1% ; S&P 500 flat ; Nasdaq +0.3%

In New York: BHP +1.6% ; Rio +0.6% ; Atlassian +0.4%

Tesla -0.3% ; Amazon +2.1% ; Apple +0.7%

In Europe: Stoxx 50 flat ; FTSE +0.3% ; CAC +0.1% ; DAX -0.2%

Spot gold ... -0.3% to $US1893.15/oz at 2.39pm New York time

Brent crude ... +1.1% to $US72.28 a barrel

US oil ... +1.2% to $US70.07 a barrel

Iron ore ... +3.5% to $US209.50 a tonne

2-year yield: US 0.15% Australia 0.04%

5-year yield: US 0.77% ; Australia 0.78%

10-year yield: US 1.53% ; Australia 1.60% ; Germany -0.23%

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What is a triple witching?

Triple witching is when the expiration of stock options, stock index futures, and stock index options all fall on the same day. It only happens four times a year – on the third Friday of March, June, September, and December – which can create a spike in trading volume and volatility.

 

Sometimes triple witching is called quadruple witching, as single stock options were added in 2002 and also expire on the same quarterly dates.

 

Unlike investing, using derivatives like futures and options carry an expiry date. This has the benefit of enabling traders to speculate on what the price of the underlying market will be over a specific period. Once the expiry date arrives, any contract holders will need to buy or sell the underlying asset in question.

 

On a triple witching day, nearly double the number of contracts expire than in any other week, which is what creates the market movements that triple witching day is known for.

 

The underlying markets will see volatility in the week leading up to triple witching, but the most active period is the final hour before the market closes on the day, known as the witching hour. This is when parties rush to close their positions, offset them or roll them over. Even those who have only opened speculative positions on the futures or options contracts will need to decide whether to close, offset, or roll over their trade at expiry.

 

Sometimes, triple witching events can come and go with little volatility. This is especially true after weekly and daily expirations became available, as activity became more spread out. However, it will all depend on the context in which the event happens, so it’s important to look at news and analysis in the run-up to the witching day.

 

Check out our latest news.

 

Triple witching calendar 2021-2022

June 18, 2021

September 17, 2021

December 17, 2021

March 18, 2022

June 17, 2022

September 16, 2022

December 16, 2022

 

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just in case someone not aware these market events [ it might make market jumping up and down]

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Wall Street rises; iron ore firms

 

Here are the overnight market highlights:

  • AUD flat to 77.07 US cents
  • Bitcoin on bitstamp.net $US40,066.35
  • On Wall St: Dow -0.3% S&P 500 +0.2% Nasdaq +0.7%
  • In Europe: Stoxx 50 +0.1% ; FTSE +0.2% ; DAX -0.1% ; CAC +0.2%
  • In New York: BHP -0.5% ; Rio -0.6% ; Atlassian +2.8%
  • Spot gold -0.74 per cent to $US1,863.60 an ounce
  • Brent crude +0.25 per cent to $US72.87 a barrel
  • US oil flat to $US70.90 a barrel
  • Iron ore +0.68 per cent to $US220.77 a tonne
  • 2-year yield: US 0.16 per cent ; Australia -0.01 per cent
  • 5-year yield: US 0.79 per cent ; Australia 0.69 per cent
  • 10-year yield: US 1.50 per cent ; Australia 1.48 per cent ; Germany -0.25 per cent

ASX to open higher. Check out the (negative) 2 yr AU bond yield

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Equities higher as the Fed push strong economy with transient inflation narrative

San Francisco’s Federal Reserve President Mary Daly told reports she was “bullish on the recovery”, “substantial” progress had been made towards the Fed’s 2% inflation target and full employment goals. But, perhaps more importantly, she thinks the Fed may be in a position to begin tapering this year. This last point alone was enough to topple equities when James Bullard effectively read from the same script on Friday, yet Jerome Powell soothed any negative response from markets with his persistent view that inflation will be transitory, when he testified to congress separately.

 

Bond yields were lower across the curve the US 10-year yield falling -2.2 bps below 1.5% and the 2-year was down -2.6 bps to a two-day low of 0.23%. On the economy, Powell said labour demand is very strong and expects strong job creation in autumn. Lorretta Mester is also in the ‘transient’ camp and expects inflation to rise to around 3% to 3.5% this year before falling back to % in 2022, adding she expects employment to fall below 4% by next year.

 

The message of a ‘strong, but not too strong’ recovery was music to Wall Street’s ears, technology stocks took the lead with the Nasdaq 100 closing to a record high and the Nasdaq’s biotech index now up 5.6% month-to-date. The S&P 500 stopping just short of its own record high with eleven S&P 500 sectors closed in the green.

 

The ASX200 recouped most of Monday’s losses during its best session in three-months yesterday, to close with a large bullish inside day. Information technology sector is the best performer month-to-date, although with an RSI (2) reading of 99.52 it is at high risk of over-extension over the near-term. At the other end of the scale, the ASX Allords gold miners index is currently down -10.7% over the same period as they tracked gold prices lower.

 

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buy the dips --------------until it not working!! :P

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AX futures ... to open 5 points higher.

Market highlights:

  • AUD +0.1% to 75.90 US cents
  • On Wall St: Dow +0.7% (at 34,433) ; S&P 500 +0.3% (record high of 4280.7) ; Nasdaq -0.1%
  • In New York: BHP +0.6% ; Rio +0.2% ; Atlassian -0.9%
  • Stoxx 50 -0.04% FTSE +0.4% ; CAC -0.1% ; DAX +0.1%
  • Spot gold +0.4% to $US1781.44/oz in New York
  • Brent crude +0.8% to $US76.18 a barrel
  • US oil +1% to $US74.05 a barrel
  • Iron ore +1.4% to $US216.45 a tonne
  • 2 year yield: US 0.27% ; Australia 0.06%
  • 5 year yield: US 0.92% ; Australia 0.87%
  • 10 year yield: US 1.52% ; Australia 1.56% ; Germany -0.16%
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