What happens to the stock market after 4.00pm close?
Can someone please explain what happens to the stock market after 4.00pm close. It seems to either add on or lose points
Ross O.
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Answer
Hi Ross,
When the market closes at 4pm it enters a period called “The Match” – during this time investors, traders and the like can put buys and sells into the market which they might do for example to complete an order which has only been partially completed. The ASX computer then matches these buys / sells in a weighted manner to determine a closing price where all trades are executed at 4.10pm:
- To buy at the Match Price you have to be buying at that price or higher.
- To sell at the Match Price you need to be selling at the close price or lower.
The big wild card is usually how the futures trade between 4 and 4.10pm, given they trade until 4.30pm. At least 10% of the daily trade volume is completed in this 10-minute period. If the futures rally hard as they did on Thursday, as markets said goodbye to September, it can drive prices higher across the board as arbitrageurs sell futures to buy shares, they profit by unwinding the 2 opposite positions when the futures fall more aggressively than the ASX200.
NB One SPI futures contract is the equivalent to ($25 x index) hence today at 7200 it’s the equivalent to a basket of ASX200 shares worth $180,000.
