FUTURES Dealers worried
The December Government stock futures contract reached new lows during yesterday’s trading due to acute worry by traders about the possibility of the sacking of the Minister of Finance, Mr Douglas, a dealer said. Mr Colin McKenna, of Jordan Sandman Futures, said yesterday that the contract bottomed out at 8587, and closed at 8600, as stock on the physical market reached yields of 14.12 per cent. Volume was good, he said, with 1932 lots traded.
The Barclays share index futures contract was “weak as water,” and closed at 1759, a 19-point discount to the physical market, which closed 32-points down from Tuesday at 1778, he said. BSI futures were also affected by political uncertainty. "Everything that is happening in the markets is political,” he said. He said there was nothing technical or fundamental to account for the behaviour of the markets, and further volatility could be expected until "we find out what is going on,” in the Government, he said.
Meanwhile, Japan’s two major stock exchanges were swamped by a flurry of buying orders just before the close on Wednesday, marking the first ever “witching hour” after the introduction of Japanese stock index futures, brokers said.
The witching hour is the last hour of trading on the day when investors may close out spot contracts before delivery. Some contract holders try to cut their losses or boost their profits by trading in the cash market to move the index closer to or further away from their futures positions.
“Today shows how the futures market can move the cash market. I think traders are a little shocked,” said Louis Tseng, vice-president of international trading at Goldman Sachs (Japan). “There was heavy futuresrelated buying towards the close that triggered a 200point rally in the Nikkei index, helping it surpass the 30,000 mark,” he said.
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Press, 9 December 1988, Page 22
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305FUTURES Dealers worried Press, 9 December 1988, Page 22
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