Caution turns spotlight on futures

FUTURES trading dominated the market as investors in cash stayed on the sidelines.

Volume was heavy as traders moved to roll over their May contracts into June.

May futures closed five points higher at 9,530, with an estimated 13,418 contracts traded.

June futures closed 25 points higher at 9,560, as an estimated 21,082 contracts changed hands.

There was no action in September or December contracts. Total estimated trading volume was 34,500 contracts, up from 29,976 on Thursday.

Traders reported having to pay a premium of about eight points to roll the contracts over, which was an improvement on Wednesday when the difference was closer to 10 points.

Volatility declined and a lot of upside call options were sold towards the end of the day.

The outlook is for a capped upside next week which may see the index drift downwards.

Traders said the market had already factored in the renewal of Most Favoured Nation status for China, and a weak cash market gave room for futures to push the market further down.

There were also a number of investors with long positions who moved to cover themselves by selling futures.

Higher volatility is expected when the market re-opens on Monday.