After hours trading: global events that had a major impact

What’s on this page?

1. Why is extended trading becoming more popular?
2. Six financial and political events that affected out of hours trading
3. What should you look out for in 2023 and beyond?

Why is extended-hours trading becoming more popular?

The last few years have been full of surprises for financial markets. Whether it was a war-induced energy crisis, pandemic-era stock rallies, or the sensational rise and fall of cryptocurrencies, there was not a dull day (or night) in the world of trading. 

Markets were even kept awake in some cases, such as during the meme stock mania of 2021, when much of the retail trading community’s conversations were also taking place outside of traditional market trading hours.

Market timings can create an added layer of challenge for traders keen to jump on any volatility and opportunities.

‘In general, US events lead to a lot of volatility, which then extends to Asia. Meanwhile European markets are shut, so traders there would have to wait for the next day to react by which time a position in the wrong direction can lose traders a lot of money,’ says Axel Rudolph, IG senior market analyst.

‘However, if they can trade around the time these events happen, they can trade out of their positions (if wrong) or add to positions (if right) with the help of extended hours trading,’ he adds.

It should be noted that trading outside of market hours also come with risks, including wider spreads due to less trading activity, increased price volatility, as well as lower liquidity due to lower trading volumes for certain markets.

Six financial and political events that affected out of hours trading

This year got off to a turbulent start, starting with a banking crisis that took down two of US’ premier start-up banks and one of Europe’s oldest financial institutions.

On the international relations front, the Ukraine War – now into its second year – comes to mind. The war created a global supply chain bottleneck, which pushed up prices of food and other commodities, further impacting an already inflationary environment.  

It would also be remiss to leave out Trump’s presidency and Brexit – two fairly recent headline events on the socio-political front whose impact can still be felt today.  

Below, we review six major past and present financial and political events, and their impact on trading sentiments globally.

What should traders look out for in 2023 and beyond?

For the rest of the year and beyond, traders and investors alike should continue to look out for opportunities not just during official market hours but also post-market hours, as this will allow them to better manage risks during volatile times. This mindset could serve them well around earnings seasons, when huge spikes or drops can take place suddenly, as in Meta’s case.

‘The fact that IG's clients can trade - both long and short - on over 80 key US stocks in pre- and post-market, plus 24-hours on some major exchange rates and global indices, offers them a far greater time window in which to adjust their positions,’ says Mr Rudolph.

‘This can be especially useful when an overnight event triggers a lot of volatility which could lead to a huge gap on the next trading day. Traders who have access to extended hours and 24-hour trading can be far more nimble than those who are bound to official trading hours,’ he adds.