Opening Price?

I am a bit confused about why a price gaps on the open?

I am monitoring RIO and I was expecting it to gap open because:

1. It rose 1.5% overnight in London.

2. It rose around 1% also in NY.

But it opened 50c lower than its previous close on the ASX.

Why is it so?

ronski456 said:

I am a bit confused about why a price gaps on the open?

I am monitoring RIO and I was expecting it to gap open because:

1. It rose 1.5% overnight in London.

2. It rose around 1% also in NY.

But it opened 50c lower than its previous close on the ASX.

Why is it so?

Click to expand...

Foreign exchange my friend - AUD was up against the Dollar and the pound last night..... If the AUD is up, the move in London and NY needs to be more than the FX move for the next days ASX price to be up.....

Cheers

A very common theme with newer traders is always expecting our market to follow the US. They are always looking to see what the US did last night. This is obviously understandable as it's the big money. and the Media which are completely clueless pump this line all the time. And we do to a large degree follow. BUT many times the Asian markets leads move not follows.

You also have to look at what our market did the day before. We had a huge day on Monday. It was almost certain the ASX would open down after such a move. And funny the US has just opened down who leads who?

ronski456 said:

I am a bit confused about why a price gaps on the open?

I am monitoring RIO and I was expecting it to gap open because:

1. It rose 1.5% overnight in London.

2. It rose around 1% also in NY.

But it opened 50c lower than its previous close on the ASX.

Why is it so?

Click to expand...

If only it were so easy.