It is known on financial markets as witching hour, and it was blamed for a surprise 1.3 per cent fall in Australian shares on Thursday.
Witching hour refers to the day each month and quarter when options and futures contracts – also called derivatives – expire and traders must close out their positions.
On Thursday the extra trading volumes sparked heavy falls among the ASX’s biggest stocks despite there being no specific economic reasons for it, with the negative sentiment of the last six weeks a key driver.
The ASX gave up more than Wednesday’s 1.08 per cent gain.
“If you look at Wesfarmers there is a lot of hurt there (down 2.9 per cent) for basically nothing … the banks are all taking a hit when from a fundamental point of view they should be on the up,” IG markets strategist Evan Lucas.
“Tomorrow you’ll probably see a reversal because people will reinstate their options positions.”
Of the market’s 50 biggest stocks, only four made gains and none of the top 20 did.
Coles owner Wesfarmers was down $1.20 at $40.20 while fellow supermarket owner Woolworths losing more ground after the resignation of chief executive Grant O’Brien and a profit downgrade on Wednesday, dropping 20 cents to $26.60.
Commonwealth Bank was down $1.06 to $83.20, ANZ dropped 49 cents to $32.37, National Australia Bank lost 24 cents to $33.13 and Westpac gave up 42 cents to $32.48.
In the resources sector, BHP Billiton was down 20 cents to $27.97, Rio Tinto shed $1.08 to $54.95 and Fortescue Metals was nine cents weaker at $2.13.
Gold miner Newcrest was one of the few stocks to rise, adding 16 cents to $13.48.
KEY FACTS
* On Thursday at the close, the benchmark S&P/ASX200 index was down 70.5 points, or 1.26 per cent, at 5,524.9 points.
* The broader All Ordinaries index was down 67.6 points, or 1.21 per cent, at 5,522.7 points.
* The June share price index futures contract expired at noon, down seven points at 5,578, with 5,520 contracts traded.
* The September share price index futures contract was 62 points lower at 5,466 points, with 42,076 contracts traded.
* National turnover was 2.5 billion securities worth $9.3 billion.
