Stocks in Europe went up on Friday during the early trading, bouncing when the sharp drop of the week came, as good macro data in the U.S. relieved worries regarding the global economy. The derivative contracts’ expiry also helped in lessening the pressure in selling.
Automaker stocks highlighted among today’s top gainers, having Renault with 3.1 percent, a 4.8 percent increase for Peugeot Citroen and a 1.8 percent raise for Daimler, supported by data saying that European car sales went up by 6.1 percent during the month of September.
At 08 08 GMT, the index for FTSEurofirst 300 featuring top shares in Europe went up by 1.5 percent, reaching 1,264.80 points. This was after it lost 3.7 percent earlier this week. The blue-chip Euro STOXX 50 index of euro zone increased by 1.9 percent and now has 2,929.60 points.
As what traders said, it was a highly volatile session, somehow, because of the derivative contracts’ expiration on Friday.
According to Jean-Louis Cussac, the head of Perceval Finance which is a firm based in Paris, beyond the flows on selling, there have also been certain technical reasons that caused the last few days’ pullback. The nearing derivative contracts’ expiry had required brokers to have their delta managed, that raised the market’s hunch.
He also mentioned that they are trying to limit the amount of damage at the moment. However, they see that today’s market is still at its highly vulnerable stage. Many hedge funds have turned into ‘short’ bonds, ‘long’ oil and ‘long’ equities. Such has contributed to the sense of panic and made them close to giving up yesterday.
Traders, as well as fund managers mentioned that Euro STOXX 50 options have reached channels between 2,900 points and 3,100 points. Brokers, too, were left with no choices but to put their market for sale and be more cautious about contracts, as the supporting index have reached the beyond the channel’s bottom.