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04. Aug. 2022

Eurex

Equity Index market briefing August 2022

by Zubin Ramdarshan, Head of Equity & Index Product Design, Eurex

Strong volume growth across the EURO STOXX index family in July

Are we seeing a dead-cat bounce, or is Jim Cramer right? The jury is still out. In July, equity markets saw relative relief from the selling pressure as some seized upon the interest rate neutrality language used by the Fed as an indication that further rate increases were less likely. The bounce was most pronounced for U.S. markets, specifically the battered tech sector, though both the FTSE 100 and broad STOXX® Europe 600 ended with monthly gains. As global interest rates mean revert, real estate has started to wobble in certain countries, notably China and Australia. Another secondary effect is the re-emergence of FX carry trades resulting in a strong dollar. So, expect to hear more American accents in the Mediterranean this summer.

With volatility still holding above long-term averages, benchmark index futures and options remain highly active. The volume strength is increasingly spread among a wider range of products. For July, we recorded good stats across the MSCI futures segment, likely driven by the rebalancing of market hedges. Highlights were MSCI China, ACWI, World, EM, Europe and EM Asia. The other notable trend was in the KOSPI index options segment, with the regular expiry and the weeklies posting large volume increases versus the same month last year. July also saw the largest compression service run executed on a portfolio of EURO STOXX 50® index options at Eurex.

Keeping a keen eye on market developments this summer, traders and investors tentatively leave their desks to enjoy a well-earned vacation. Similarly, at Eurex, we will briefly pause before resuming plans across our new crypto segment, including introducing product extensions in our FTSE index derivatives and new functionality for the dividend index futures. Concrete launch dates to follow in due course.

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