Deepening Rout in U.S. Stock Futures Triggers Limit Down Rules
Source: Bloomberg
Waves of selling in U.S. stock index futures triggered Chicago Mercantile Exchange limits that prevent declines from surpassing 5% from a closing reference price, as the spreading coronavirus rattled investors and crude oil plunged.
E-mini futures on the S&P 500 Index sank 5% to 2,819 as of 8:05 p.m. in New York, hitting a limit triggered when the measure falls 5% from the price calculated in the last 30 seconds of trading Friday. The curb means the contract can’t trade at a lower price for the remainder of the overnight session, although transactions at or above the threshold are allowed.
“It allows cooler heads to prevail,” JJ Kinahan, chief market strategist at TD Ameritrade, said by phone. “Particularly in the overnight sessions it’s a good thing to have because you just don’t have as many products at work. This is one rule that it’s been so long since we have seen it, but it’s proved effective over time.”
Equities have whipsawed all week in trading as volatile as any time on record as investors assess the threat to the global economy from the spreading coronavirus. Concerted efforts from central banks and governments to soften the blow spurred gains earlier in the week, but the accelerating rise of reported cases raised the specter of a global recession and led to a powerful rally in Treasuries that sent yields to record lows.
Read more: https://www.bloomberg.com/news/articles/2020-03-08/rout-in-u-s-stock-futures-would-trigger-trading-curbs-at-5
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Down $10/bbl and .25/gallon respectively 