This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
- End of financial year selling. Traders are selling weak names to offset against any gains made through the year.
- Greek issues are in play. The IMF have a deadline ‘before the Asian session’ on Monday and nothing is certain at this stage. Some will feel it’s prudent to take some risk off the table. This view is what the media will be saying, but if I sense check this view we are not really seeing any major risk off moves in safe havens. Aussie treasuries, gold and US futures are flat, for example.
- Options expiry yesterday. This would explain the monster volume. Traders would have taken delivery of stock and perhaps these holdings were no longer wanted after being exercised. If the pace of the volume slows into the afternoon then this could make sense as many would have sold on open.
- Volume in the cash market and SPI futures is huge (nearly $4b in cash).
- The technical guys wouldn’t care whatever the reason. As you can see, the index is making a series of lower highs and lows (ie. a downtrend) and they would argue that, whatever the reason, the probability of sharp fall increases if the index is in a downtrend.
- Some have said the fact Chinese markets fell 3.5% into the close yesterday has seen us playing catch up. This is nonsense, as the ASX 200 actually has a negative 20-day correlation with the CSI 300.