Rate concerns trim early morning gains

PUBLISHED : Tuesday, 31 October, 1995, 12:00am
UPDATED : Tuesday, 31 October, 1995, 12:00am

NOVEMBER futures saw the morning gains eroded in the afternoon with investors sidelined over US interest rate concerns.

The relatively quiet day saw November futures end 50 points up at 9,705 .

Activities shifted to November contracts with the expiry of the October contracts and the November contracts closed at a premium of 33 points over the cash.

Volume was thin with a total number of only 17,337 contracts traded, against the total volume of 25,608 contracts on Friday last week.

Boosted by the strong performance in the US market last week, November contracts opened up by 90 points at 9,745.

Support was found throughout the morning with strong overseas buying sending the market up to the day's high at 9,792 points.

The morning session ended at 9,760, a four point discount.

Early afternoon trading saw strong buying which sustained the November futures above the 9,760 level.

Trading lost steam later in the afternoon and the November contracts slumped to the day's low at 9,690 on the absence of buying and closed at 9,705.

Yesterday's volume of November contracts was 13,822. Brokers said the dim US interest rate outlook wiped out bullish sentiment in the morning that had been boosted by the strong close on Wall Street.

The US Commerce Department reported a better than expected annual economic growth rate of 4.2 per cent, dampening expectation of a US interest rate cut soon. October contracts closed at 9,761 points, up 96 points with 3,506 contracts changing hands.

For options, activities concentrated on November 9,400 and 9,600 puts.

Jardine Fleming said overseas premium sellers had been selling the 9,400 and 9,600 puts while local bears bought them.

Front month implied volatility dropped to 20.25 per cent, 5.73 per cent above the historical implied volatility.

A total of 2,103 lots of options were traded and the open interest was 41,378 lots. Turnover of stock options dropped significantly with 2,940 HSBC options, 1,441 Cheung Kong options, 40 Hong Kong Telecom options, 564 Swire A options and 12 Citic options changing hands.