FTSE share price

[anonymous-user]

Hi everyone, I wonder if anyone knows what/who triggers the 'initial' movement of a share price at the beginning of trading? The reason I ask is that a particular share price can spike or drop between the hours the market is closed and is only known to us mere mortals at the opening, given the fact there has more often than not been no breaking news or financial statements I can only conclude some fund software or a broker marks the price up/down to protect themselves; I look forward to hearing ideas/conclusions. Thanks in advance

[dmahon]

The bids and offers change between market closing and market opening, the same as if you were buying or selling bananas at your local market.

The bids and offers change for a million and one reasons e.g. change in supply and demand, different market participants, general market confidence, funds flowing in and out, orders placed overnight, news affecting the sector etc. Much of it is just noise if nothing fundamental has changed.

[anonymous-user]

dmahon said:

The bids and offers change between market closing and market opening, the same as if you were buying or selling bananas at your local market.

The bids and offers change for a million and one reasons e.g. change in supply and demand, different market participants, general market confidence, funds flowing in and out, orders placed overnight, news affecting the sector etc. Much of it is just noise if nothing fundamental has changed.

Thanks and get what you say and understand all those things you mention happen BUT who sets the price during the night?

[craigjm]

mgsontour said:

Thanks and get what you say and understand all those things you mention happen BUT who sets the price during the night?

The other markets around the world that are open. Gains and falls impact here too.

[anonymous-user]

craigjm said:

The other markets around the world that are open. Gains and falls impact here too.

But FTSE shares aren't traded in those markets?

There is an out-of-hours way of trading shares, that's why the price can change before mortals get the chance when the markets officially open: http://www.wisestockbuyer.com/2012/05/all-about-af...

[craigjm]

ScotHill said:

craigjm said:

The other markets around the world that are open. Gains and falls impact here too.

But FTSE shares aren't traded in those markets?

There is an out-of-hours way of trading shares, that's why the price can change before mortals get the chance when the markets officially open: http://www.wisestockbuyer.com/2012/05/all-about-af...

I didn’t say they were. Waves from the financial markets around the world impact in London shares whether the market is open or not.

[anonymous-user]

craigjm said:

I didn’t say they were. Waves from the financial markets around the world impact in London shares whether the market is open or not.

But only because of the out of hours trading mechanism, which presumably what the OP wanted to know about.

[Condi]

ScotHill said:

But only because of the out of hours trading mechanism, which presumably what the OP wanted to know about.

This refers to US markets, but explains the principle;

https://www.investopedia.com/ask/answers/05/saleaf...


And besides that, say for example that you have a stock with a bid/offer of £1:£1.10 on the close, with last trade at £1.05.

Overnight the Asian markets are down, and FX moves so the companies foreign contracts are worth less.

Next morning when UK market goes into pre-open, and people start submitting bids + offers, the value of the company is seen as lower and thus bids and offers are now lower, say £0.90:£1.00.

The price is now 'lower' than the night before, even before any trades have taken place, and the first trade might be £0.95, down £0.10 from the close. Its a 'jump' in price, rather than someone trading down from £1.05 in 1 session.

That is just the risk of holding a stock, and it is why you often see large moves early in the morning as all the sentiment and news from the overnight is digested, and all the pre-submitted orders are actioned. By 10am the market has shaken itself out and the price returns to closer to where it had been the day before.

[dmahon]

Nothing moves the price overnight. At the close someone might be willing to pay £1.50 for a share. In the morning, for whatever reason, someone enters an order willing to buy for £1.52 at the open. The market has just moved.

Edited by dmahon on Wednesday 5th June 21:43

[anonymous-user]

Condi said:

This refers to US markets, but explains the principle;

https://www.investopedia.com/ask/answers/05/saleaf...


And besides that, say for example that you have a stock with a bid/offer of £1:£1.10 on the close, with last trade at £1.05.

Overnight the Asian markets are down, and FX moves so the companies foreign contracts are worth less.

Next morning when UK market goes into pre-open, and people start submitting bids + offers, the value of the company is seen as lower and thus bids and offers are now lower, say £0.90:£1.00.

The price is now 'lower' than the night before, even before any trades have taken place, and the first trade might be £0.95, down £0.10 from the close. Its a 'jump' in price, rather than someone trading down from £1.05 in 1 session.

That is just the risk of holding a stock, and it is why you often see large moves early in the morning as all the sentiment and news from the overnight is digested, and all the pre-submitted orders are actioned. By 10am the market has shaken itself out and the price returns to closer to where it had been the day before.

So do shares change hands overnight at a price different to the close? Because the link implies they do, but your explanation seems to say that no shares change hands until the official market open the next day...

[Condi]

ScotHill said:

So do shares change hands overnight at a price different to the close? Because the link implies they do, but your explanation seems to say that no shares change hands until the official market open the next day...

They can trade at any price in the pre and post market hours, but there is also a closed window overnight when prices can move without any trades happening. Generally the pre and post hours are the preserve of the large institutions just knocking some volume around, and smaller and private investors have been unable to access these prices, being more active in the main hours when the prices are shown on screen.

So take my example, someone could trade after hours at £1.03, and then the following morning pre-open the best bid offer spread is £0.85 to £1.05. Come official opening time there are a large number of buyers and sellers now, and the spread tightens up to £0.90 to £1.00.



No doubt someone on here will know far more than me, and can better explain it.

[anonymous-user]

mgsontour said:

Hi everyone, I wonder if anyone knows what/who triggers the 'initial' movement of a share price at the beginning of trading? The reason I ask is that a particular share price can spike or drop between the hours the market is closed and is only known to us mere mortals at the opening, given the fact there has more often than not been no breaking news or financial statements I can only conclude some fund software or a broker marks the price up/down to protect themselves; I look forward to hearing ideas/conclusions. Thanks in advance

Wow, this topic is technical but as I expected the PH boys can get to the bottom of most things. . . So after reading your comments ( all great reading ) we have now concluded since yesterday that news etc gathers momentum during the night and is executed in the moments in a pre opening market which we don't have access to BUT in the US for example they have ECN brokers ( which UK doesn't ) but after a google search we have ECN/STP brokers https://investingoal.com/ecn-stp-uk-forex-brokers/

Assuming one was to open one of these accounts would it answer my question of the OP?