Market Quote: More on Equity Market Volatility and the U.S. Election
Author: The editor's desk
August 22, 2024
A mid-week analysis of what’s happening in global financial markets from the perspective of AGF’s investment management team.
No Other Option?
One facet of the recent volatility in global equity markets that may not be getting the attention it deserves is the growing appetite for same day options trading, or zero days to expiration (ODTE) as they are also known. Used primarily to hedge portfolio risk, S&P 500 Index ODTE’s now represent more than 40% of the options volume associated with the index, up from just 5% in 2016, according to CBOE Global Market data.
Moreover, retail participation in these types of options – and equity markets more generally—may be another reason for the heightened volatility we’ve seen because it tends to be less patient than institutional participation and often leads to more selling during periods of weakness than would otherwise be the case.
It’s Not Over Until It’s Over
Several factors could still alter the outcome of the U.S. presidential election, including the potential for the U.S. Federal Reserve to signal more clearly that interest rate cuts are imminent at the central bank’s annual Jackson Hole symposium that begins later tonight and goes until midday Saturday.
Other potential “issues” that could help determine the result in November range from a slowing economy and possibility of truce talks between Russia and Ukraine this fall to the release just days before the election of the latest U.S. federal budget deficit, which is expected to show a huge rise, close to US$2-trillion.
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The views expressed in this blog are those of the author and do not necessarily represent the opinions of AGF, its subsidiaries or any of its affiliated companies, funds, or investment strategies.
Commentary and data sourced from Bloomberg, Reuters and other news sources unless otherwise noted. The commentaries contained herein are provided as a general source of information based on information available as of August 22, 2024. It is not intended to address the needs, circumstances, and objectives of any specific investor. The content of this commentary is not to be used or construed as investment advice, as an offer to buy or sell any securities, and is not intended to suggest taking or refraining from any course of action. Every effort has been made to ensure accuracy in these commentaries at the time of publication, however, accuracy cannot be guaranteed. Market conditions may change and AGF Investments Inc. accepts no responsibility for individual investment decisions arising from the use or reliance on the information contained herein.
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