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Australian Stock Market Slumps Due to Arbitraging

Strategic Insights

— 1 min read

Arbitraging was identified as a key contributor to a late slump in the Australian stock market, which forfeited early gains to close 17 points down. Despite opening with a more than 20-point lead, the benchmark all-ordinaries index closed 17 lower at 2815.6 points. Market analysts pointed to arbitraging in the futures market as a possible cause, citing the March share price index contract's dramatic turnaround in the last hour and a half of trading.

Key Takeaways:

  • Arbitraging was identified as the likely cause of the late slump in the Australian stock market, which forfeited early gains to close 17 points down.
  • The benchmark all-ordinaries index closed 17 lower at 2815.6 points, despite opening with a more than 20-point lead.
  • Arbitraging in the futures market was cited as a possible cause, with the March share price index contract experiencing a dramatic turnaround in the last hour and a half of trading.
  • The March SPI closed 59 points down at 2845.0, a 29.4 premium to the physical market, with 13724 lots traded.
  • Weakness in Japan's Nikkei share index may have had an impact on the Australian market, with the Nikkei down 279 points at 13137.
  • Profit takers pulled stocks such as Telstra back, with the stock closing 22 cents down at $7.60.
  • Other telcos remained buoyant, with Cable & Wireless Optus surging 13 cents to $3.69 and AAPT adding 15 cents to $4.35.
  • Banking stocks had a mixed day, with the sub-index climbing 49.5 points to 6473.5, largely due to a 33.1 cents gain by National Australia Bank to $24.99.
  • AMP finished steady at $20.91 after gaining control of fellow insurer GIO in a $3.3 billion hostile takeover.

Statistics:

  • The Australian stock market closed 17 points lower at 2815.6 points.
  • The benchmark all-ordinaries index forfeited a more than 20-point lead to close 17 points down.
  • The March SPI closed 59 points down at 2845.0, a 29.4 premium to the physical market.
  • A total of 13724 lots were traded on the March SPI.
  • The Nikkei share index in Japan was down 279 points at 13137.
  • The Dow Jones Industrial Average Index closed up 2.84 points at 9184.27 points.
  • A total of 408.39 million shares were traded, with a turnover of $1.43 billion.

Sources:

  • Asia Pulse (C) 1999 Asia Pulse Pte Ltd
  • COMTEX (http://www.comtexnews.com)

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