Frankfurt’s DAX index exhibited minimal movement throughout Friday morning, closing near its previous day’s level at 24,195 points. The sluggish performance is being attributed by market analysts to what they are terming the “witching hour” a period coinciding with the expiry of options and futures contracts. Andreas Lipkow, a prominent market analyst, characterized the phenomenon, noting that “powerful investors” frequently exert influence to manipulate prices, regardless of cost, during these quarterly expiry events.
This Friday marks one such occasion, a routine occurrence typically held on the third Friday of the third month of a quarter. The “witching hour” has drawn scrutiny, raising concerns about the potential for artificial volatility and the opacity surrounding the strategies employed by large institutional investors. Critics argue that such market interventions, even if technically legal, undermine the fairness and efficiency of financial markets, potentially distorting price signals and impacting smaller investors.
The lack of significant upward momentum in the DAX also reflects cautious sentiment amongst traders, who are keenly awaiting the release of economic data from the United States. Existing home sales figures and the University of Michigan’s consumer sentiment index are expected to offer insights into the health of the U.S. economy, a crucial driver for global markets.
Meanwhile, the euro weakened slightly against the dollar, trading at $1.1713, underlining the broader anxieties surrounding the economic outlook and ongoing currency fluctuations. The relative stability, though presented as temporary, underscores a market holding its breath, keenly observing the interplay between technical expiry events and critical macroeconomic indicators.
