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November was characterized by post-election and vaccine-driven bullish sentiment propelling the global equity markets. The subsequent burst of activity saw several Eurex products trade heavily, especially the benchmark EURO STOXX 50® and STOXX® Europe 600, where both the futures and options leaped-up in volumes compared to the same month last year.
The market entered a great sector rotation: Before the vaccine news emerged, technology firms had been the best-performers. At the same time, investors were naturally defensive in other sectors, such as consumer staples and utilities. Last month we saw these same investors moving aggressively into cyclical sectors such as energy, transportation, and financials. Consequently, we saw record volumes in the Bank sector suite of index futures, options and dividend futures. Market participants expect a recovery in dividends as corporate earnings grow and regulator guidance eases to facilitate a resumption of shareholder cash payments. Several other STOXX® Europe 600 sectors also experienced robust volumes in both futures and options: Oil & Gas, Telecoms, Basic Resources, Insurance, Autos & Parts, Utilities, Travel & Leisure and also Industrial Goods & Services.
This positive shift in market positioning also drove index derivative activity at a global level. MSCI futures in focus included, at a regional level: EM Asia, World, Europe, EM Latam and Pacific. Also, at a country level: Japan, Australia, Canada, India, China Free, Thailand and Malaysia. Additionally, two of the recent MSCI EM index inclusions, namely Saudi Arabia and Kuwait, continued to experience a solid level of interest. All of this bodes well for the December roll period, where we anticipate our members and clients will heavily utilize the Eurex order books to extend their positioning into 2021.
After the December expiry, members can look forward to the recalibration of tick sizes for our DAX® Futures. Here the tick size will increase while our Banks sector futures will see tick size reductions. The purpose is to improve liquidity and customer experience by re-aligning both these contract parameters given the divergent spot price moves during recent years.
Zubin Ramdarshan, Head of Equity & Index Product Design, Eurex