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Equity Index market briefing September 2020

Release date: 02 Sep 2020 | Eurex Exchange

Equity Index market briefing September 2020

August was particularly quiet as market participants stepped away and took a collective breather. Perhaps this is where the elusive Robinhood App trader stepped into the void. Much speculative analysis has been devoted to millennials' impact using bailout cash to open online trading accounts to purchase Tesla and Apple stock and the other FAANG members. I wonder if it still holds true that retail flows are contrarian indicators. Indeed, as I write now, the unwinding of the growth vs. value outperformance may well be triggering a mean reversion of these equity factors.
 
While there are few volume highlights to share for the month, some exciting trends developed across our Asia-focused index portfolio. Compared to the same month last year, futures trading significantly picked up the mini-Kospi 200, MSCI Australia, MSCI Japan, MSCI Taiwan, MSCI Malaysia and MSCI Philippines. These are notably all contracts that benefit from the possibility to trade during extended hours at Eurex. Looking at the index options, we saw a large increase in STOXX Europe 600 volumes. I would assume this was driven by opportunistic hedging as markets remained well above the Q1 lows as we enter a historically volatile period where market corrections have been a feature.
 
Turning to important new product launches, as of 21 September, Eurex will list four new sector index futures and options. This is driven by the new ICB classification and sees four indices being calculated for both EURO STOXX® and STOXX Europe 600® sectors on Food, Beverage & Tobacco, Energy, Consumer Products & Services, and Personal Care, Drug & Grocery Stores. Members can anticipate more launches across our equity options, single stock futures, and ESG segment as we enter the year's final quarter. With the key decision-makers now back at their trading desks, the market environment has already shifted in September's first few trading days. With it, the demand for derivative hedging increases.