This morning, the world’s largest futures exchange, CME Group, had to repeatedly halt trading in US stock futures for brief periods because of violent price moves.
US futures reopened in Asia today after yesterday’s closure to market the funeral of former President George H.W. Bush.
The futures market in Asia fell heavily today and it was during this time that the CME Group intervened to manage the volatile trading activity, putting a stop to algorithms closing orders.
CME announced this morning that it intervened to prevent steeper falls in US equity futures.
Markets are unsure what caused the move, with some speculating that it may have been sparked by an accidental “fat finger” trade.
(A fat finger is a human error caused by pressing the wrong key when inputting data in the computer for trading. Fat finger errors are often harmless but can sometimes have a significant market impact. E.g. selling 1 million of shares instead of 100,000)
Another reason which has been putting pressure on the futures market was that during the night, the CFO of privately-owned Chinese tech giant Huawei, was arrested in Canada at the request of the US and now faces extradition on suspicion of violating the US’s trade sanctions on Iran.
The news can be quite significant especially in the context of the global trade war which has yet again placed more pressure on markets.