Futures: the week of the share contract

Press, 10 January 1987, Page 29

Futures: the week of the share contract

The launching of shareindex futures was the highlight of futures trading this week. January share futures closed yesterday on their low for the day at 3745, up eight points from the Thursday close. The Barclays index itself was up 4.63 points yesterday at 3743.69. With many of the institutional investors still at the beach, trading in this and in the other financial futures was slow. It will pick up next week. Mr Paul Rinsma, of Marshall futures, said the March share contract began hesitantly on Monday, trading in low volume between 3875 and 3940. The futures contract followed the physical index down for most of the week before improving as traders began to realise that the New Zealand sharemarket did not like.to fail for much longer than three to four days, Mr Rinsma said. However, he described the short-term outlook as weak. Mr Geoff McDonnell, futures manager of Mair Astley, Ltd, expects volume to increase substantially “once the New Zealand sharemarket gets into swing for 1987.” U.S. dollar The New Zealand dollar traded through the 5320 to 5420 range during the week, futures prices moving through a 300 point range, said Mr McDonnell.

“The high interest rates and capital inflows were the contributing factors to a stronger kiwi dollar. However, at the week’s end the kiwi moved lower, through the JU50.5300 level, as the market began to absorb the conjecture surrounding the N.Z. interest rate structure. “In the near future we expect to see some volatile trading on the foreign-ex-change and futures markets.” Mr David McClatchy, of the NZI Futures Division, Auckland, said the support levels were JU50.5295 and 5U50.5220. The resistance levels were 5U50.5420 and JU50.5440. He said earlier yesterday that the kiwi dollar needed to close at 5U50.5320 to maintain its bullish trend. (It closed at JU50.5355.) Government stock Mr M. McDonnell said the announcement by the Minister of Finance, Mr Douglas, that there would be no further stock tenders before March 31 had "inspired confidence in the money market" “At the week’s end volume was increasing on all futures contracts as the money market started to react to the Minister’s announcement” he said. Government stock Government stock futures traded thinly for most of the week between 8280 and 8310, until yesterday, when prices climbed to a high of 8328 before tracking back to the 8313 level at midday, said Ms Jan Harry. The volatile upswing was the result of market interpretation of the announcement that the first-quarter funding programme would not include any tenders, she said. "Still to come this month are the other indices. Consumer Price Index and balaance at payments. Also watch the kiwi dollar and offshore interest.” Mr McDonnell said that even though the “lungs” (those with buying positions) had greater probability of profit than the "shorts” (those with selling positions), “we would look for a big fall in the call rate before becoming aggressive buyers on the futures index. In the meantime, we see 8310 as support and 8330 as a possible resistance level.” Bank accepted bills Bank-bill futures traded between 7525 and 7825, basis January, reflecting the volatility and shortfall of liquidity earlier in the week, and eased later in the week, said Ms Harry. “Interest rate futures look mildly bearish short term and bullish long term.” Mr Mcdonnell said term rates moved down 2 per cent during the week. However, no clear direction could be seen emerging until the money market absorbed the figures for the December, 1986, quar-

ter relating to the Consumers Price index. “Bearing in mind that the Government is committed to a downward trend in interest rates we would suggest that 7750 (22.5 per cent), is the support level on the index,” Mr McDonnell said. Wool Wool futures were mixed yesterday, with January and May closing firmer than on Thursday, but most other months easier. The wool market this week was relatively active coasidering the amount of confusion because of a fluctuating New Zealand dollar and an erratic physical wool market, said Mr Guy Spooner, of Marshall Futures. Futures prices this week did not fall sharply when the kiwi dollar finned up to the 5400 level or when the physical market eased 9c compared with tne last sale last year. “The auction on Thursday eased to 570 c a kilogram for the 35F2D wool, but firmed on the Friday to approximately 575 c a kilogram. “This firming in prices has

justified our theory that wool price levels are to remain firm in the near term regardless of a finning kiwi dollar.” Mr McDonnell said prices of wool futures moved down during the week in response to the stronger NJZ. dollar. “However, auction prices remained firm, with trade houses eager to procure wool. We see • little downside in wool prices and we would look for opportunities to open longs (buying positions) as we see demand for wool remaining, and there is a possibility of a weaker kiwi dollar later in the year if there is a pronounced downward trend in interest rates.” Sydney In Sydney, March share price index futures closed yesterday 23.0 points higher at 1554.0, an 18.8 point premium to the physical. AAP reports that the Sydney Futures Exchange has recorded a spectacular increase in trading of 172 per cent for 1986, with 3.4 million' contracts exchanged, compared with 1.24 M in 1985. The biggest contributor to the rise in volume last year

was the 10-year bond futures contract, which increased its volume to 1,431,595 lots In 1986 from 242,282 lots. The 90-day bank bill contract, the second most active in 1986, traded 1,071,546 lots compared with 594,086 lots, while the number of allordinaries index contracts traded in 1986 rose 80 per cent to 464,475 from 282,317. Details of yesterday’s trading in New Zealand: SUS CONTRACTS

COMMERCIAL BILLS Contracts traded: Nil Open petitions at Jan 8: Jan I. Feb 5, Mar 349. Jun 12, Sep 43, Dec 40, Mar 39, Jun 10, Mai 615 (same). GOVERNMENT STOCK Mth Open H/L Last Vol Mar 8328 328/308 308 485 Contracts traded: 485 Open positions at Jan 8: Jan 17. Mar 2580. total 2597 (up 13).

Oct 182. Dec 139. Jaa 398. Mu--174. May 9X Mai MM (darn 48). ■ WHEAT Cartracts traded: NH i. Ope* paalttoM at JM 8: Feb 17. MU- 25, May 11, total 99 (same).M BANK BILLS Mth Open H/L Last Vat Jaa 7825 82S/775 775 43 Feb 7835 835/935 835 1 Mar 8090 9080/950 950 12 Contracts traded: 50 Open positions at Jan 8: Jaa 758, Feb 43, Mar 143. Jn M, Sep 10, Dec 21. Mar 21. Ju 20. Sep 20. Dec 20. total 1091 (wp 1). BARCLAYS SHARE INDEX Mth Open H/L Last Vol Jan 3780 780/745 745 7 Mar 3730 780/730 765 82 Contracts traded: 69 Open positions at Jan 8: Jan 25, Mar 81, total 106 (up 36).

NX FUTURES MARKET WEEK ENDED January 9 Trading Traded prices Total Open months This week To date this cent’s JUS High Low Last High LOW week Jan '87 1.8900 1.8510 1.9685 2.14571.8510 163 496 Feb ’87 1.9000 1.8765 1.8860 2.00001.8765 24 27 Mar ’87 1.9337 1.9000 1.9127 2.08001.9000 14 22 Totals 201 545 PCP Jan ’87 — 8250 8100 — 6 Feb ’87 —- — 8225 8225 —— 5 Mar ’87 7750 7750 7750 8500 7750 22 349 Jun '87 — —— 8520 7800 123 Sep ’87 — — 8500 7800 — 43 Dec ’87 — 8565 7800 — 40 Mar '88 — 8500 7800 — 39 Jun ’88 — — 8450 8410 10 Totals 22 615 GOVERNMENT STOCK Jan ’87 8303 8280 8300 8435 8245 42 17 Feb ’87 8280 8207 —- — Mar ’87 8328 8283 8308 8455 8249 887 2580 Jun ’87 — — 8580 8400 — —— Sep ’87 —— — 8436 8400 — — Totals 929 2597 WOOL Jan ’87 578 552 565 599 474 58 74 Mar ’87 584 569 570 605 480 157 311 May ’87 598 585 595 614 486 74 512 Aug ’87 605 597 601 629 532 32 203 Oct ’87 607 598 607 625 530 9 182 Dec ’87 612 605 609 626 541 16 139 Jan ’88 612 605 605 625 541 32 208 Mar ’88 615 605 612 625 551 23 174 May ’88 617 609 615 630 575 13 93 Totals 414 1896 Tenderable Stock: : 563 bales. 35F2D quotes — 570 in Christchurch January 9. WHEAT Feb ’87 — — — 2290 2060 —— 17 Mar '87 —— —— — 2330 2050 — 25 May ’87 — — — 2350 2060 — 18 Jul ’87 — — —— 2150 2150 — — Totals — 60 M-DAY BANK ACCEPTED BILLS Jan ’87 7825 7525 7775 8070 7700 199 756 Feb ’87 7850 7650 7835 8030 7650 22 43 Mar ’87 8000 7765 7950 8120 7765 52 148 Jun '87 8100 8100 8100 8160 8100 1 26 Sep ’87 — 8150 8100 — 16 Dec ’87 — 8160 8000 — 21 Mar '88 — 8185 8000 — 21 Jun '88 8180 8100 — 20 Sep ’88 —— — 8190 8100 — 20 Dec ’88 — 8200 8100 — 20 Totals 274 1091 BARCLAY’S SHARE INDEX Jan ’87 3816 3732 3745 3816 3732 59 25 Feb ’87 — — —— — — —- — Mar ’87 3940 3730 .3765 3940 3730 182 81 Totals 241 106

Mth Open H/L Last Vol Jan 1.8615 8860/615 8685 32 Feb 1.8850 9000/850 8860 5 Mar 1.9127 9127/127 9127 6 Contracts traded: 43 Open positions at Jan 8: Jan 496, Feb 27, Mar 22, total 545 (up 7).

WOOL Mth Open H/L Last Vol Tan 565 565/565 565 4 Mar 577 580/570 570 40 May 596 598/594 595 13 OCt r 605 607/605 607 2 Dec 609 609/609 609 1 Mar 612 612/612 612 3 May 615 Contracts 615/615 615 traded: 65 2 Open positions at Jan 8: Jan 74. Mar 311 . May 512. Aug 203,