Futures, Options Expiries Push Index Into The Red
Sydney Morning Herald
Saturday March 31, 2001
The value of trades passing through the market topped more than $3 billion yesterday, as the March share price index (SPI) futures contract expired and trades from Thursday night's options expiry were pushed through the market.
The session was predictably volatile throughout the afternoon as the futures expiry approached. Concerns about the extent of the outstanding arbitrage positions led a number of brokers to start unwinding their positions at 2pm and the All Ordinaries index suddenly dropped from 3,122 to 3,096.
At 3.45pm, when the expiry began, share prices began to rally as a number of investors took advantage of the weakness. However, after the matching of orders had been completed, the All Ordinaries was at 3,096.9, a drop of 28.4 points on the day.
The SPI 200 futures contracted expired at 3,148, down 30 points and a one-point discount to the underlying ASX200 index.
Dealers said the expiry had been reasonably orderly, but noted that the main arbitrageurs had been very active as they unwound their positions.
``All the big stocks were affected but I didn't witness anything particularly dodgy," said one trader. ``As usual, the ASX flagged that it would be watching everything very closely."
News Corp's ordinary shares fell 55c to $15.53 and the preferreds 35c to $13.23 adding further pressure to the overall market. A statement from US giant General Motors that it was considering a number of ``strategic investments" for the future of its Hughes Electronics subsidiary, led to increased speculation that the sale to News may not happen. News needs Hughes for its DirecTV satellite division a vital component in media group's satellite strategy.
BRL Hardy rose 25c to $9.74, after earlier hitting a record of $9.92 as rumours the wine maker's interest in buying Kendall Jackson had cooled, allaying previous concerns BRL would fork out as much as $2billion twice its market capitalisation on the deal. A second set of rumours that Diageo might take an interest in acquiring BRL were traced back to Diageo raising $800 million in a recent bond issue.
Other than News Corp, the main decliners were Telstra, down 7c to $6.42 with 41 million shares changing hands due mainly to the various expiries. CBA fell 27c to $28.60, ANZ 20c to $13.78 and BHP 15c to $19.60.
The most heavily traded stock of the day was C&W Optus, down 4c to $3.64 with more than 46 million shares traded. Arbitrage activity between Optus and SingTel as well as the expiries created the interest, dealers said.
Lend Lease rose 24c to $12.55.
On Wall Street, earnings warnings from a number of companies hindered gains overnight. The Dow Jones Industrial Average finished just 13.7 higher at 9,799.06, after a volatile session. Nasdaq extended Wednesday's 118-point slide, closing down 33.5 at 1,820.57.
Foster's rose 5c to $5.15 on expectations that the Government might scrap legislation that currently makes beer more expensive. The Federal Government is in negotiations with Opposition leaders over the slashing of beer taxes from mid-April, reversing an earlier decision to increase tax on alcoholic beverages.
Woolworths rose 3c to $8.30 after revealing it was competing successfully with newcomer Aldi and that there had not been any significant impact on its results from the German discount chain. Coles Myer slipped 3c to $6.32.
FACT FILE
Expiry of SPI 200 futures contract dominated, following Thursday's options expiry.
More than $3bn worth of stock changed hands as 55,000 trades passed through the market.
News Corp slumped on concerns the DirecTV deal with General Motors is off.
© 2001 Sydney Morning Herald