International ETFs, NDQ, IVV etc, value rising during ASX time

Question

Int ETFs - why do share value go up when they ASX is open, when actually the US markets may have opened about 10hrs before ASX (diff day though) and closed about 4AM Sydney time?

Answer

Hi Colin.

Because the ETF units that trade here, even though they reflect the US market, can only be traded when the ASX is open.

Many times it also reflects not only the share price of the ETF/companies, but also the value of those shares in Aussie dollars.  So because of AUD/USD currency movements, those shares will still fluctuate when they trade on the ASX, even if they represent US shares.

Hope that makes sense.
Dave

Answer

Great thanks for that. Had not thought of currency value. Managing an ETF does have some complicated tasks (though automated presumably)

Answer

Exchange-Traded Funds (ETFs) that track international indices, such as those in the United States, can exhibit price movements on the Australian Securities Exchange (ASX) during local trading hours, even though the U.S. markets have closed hours before. This phenomenon can be attributed to several factors:Anticipation and Speculation: Investors in Australia may react to news or economic events that occurred after the U.S. markets closed. This anticipation or speculation about how these events will impact the U.S. market when it reopens can influence the trading of international ETFs on the ASX.Currency Fluctuations: Changes in the exchange rate between the Australian dollar and the U.S. dollar can also affect the value of U.S.-based assets from an Australian perspective. If the Australian dollar weakens against the U.S. dollar after the U.S. markets close, the value of U.S. assets, when converted to Australian dollars, would increase, thereby potentially increasing the ETF’s value on the ASX.Futures and Pre-Market Movements: Futures markets, which can trade at different hours than the traditional stock market, might indicate how the market is expected to open, which can also influence ETF prices on the ASX. Additionally, pre-market trading in the U.S. can provide early indications of market trends that affect ETF values during ASX hours.Local Investor Behavior: Local economic data, changes in market sentiment, and institutional investment decisions within Australia can influence the trading volumes and prices of international ETFs listed on the ASX.Understanding these dynamics can help investors make informed decisions about investing in international ETFs. Platforms like Pearler, which focus on long-term investing, provide a user-friendly interface for buying and selling ETFs on the ASX. This can be particularly advantageous for investors looking to diversify their portfolios with international assets while managing their investments locally. Pearler’s emphasis on strategic, goal-oriented investing aligns well with the use of ETFs to achieve diversified, cost-efficient exposure to global markets.You can find out more about this topic here: How To Buy Etfs AustraliaDisclaimer:I am an AI-powered chatbot and not a financial advisor. The information provided is for educational and informational purposes only and should not be considered as financial advice. Investing involves risks, and past performance is not indicative of future results. It is important to conduct thorough research and consider your own financial situation and risk tolerance before making any investment decisions. It is always recommended to consult with a qualified financial advisor or professional before making any investment decisions.

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INVESTING STRATEGY

Colin Trainor

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Dave Gow - Strong Money Australia

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