US shares

The United States equity market is the reference point most other equity markets are described against, and a great deal about it is unusual rather than typical. It runs one uninterrupted session with no lunch break. It publishes a formal opening and closing price struck by auction. It reports company results on a quarterly calendar with a guidance culture attached. It clusters an enormous proportion of its market value in a small number of technology and technology adjacent companies. Each of those facts changes how a contract written on a US share behaves.

The venues 

Two primary listing venues dominate. The New York Stock Exchange lists a great many of the older industrial, financial, energy and consumer companies: Exxon Mobil Corp., JPMorgan Chase & Co., Berkshire Hathaway, Walmart Inc., Chevron Corp. Nasdaq lists a great many of the technology and growth companies: Apple Inc., Microsoft Corp., NVIDIA Corp., Alphabet Inc., Amazon.com Inc. The split is historical rather than principled, and companies do move between the two, so it is a useful shorthand and not a rule.

Trading in a US listed share is not confined to its listing venue. Orders are routed across a network of exchanges and alternative venues, and the consolidated tape stitches those prints into one continuous record. The listing venue keeps two privileges that matter regardless: it runs the opening auction and it runs the closing auction, and the price struck by the latter is the official close used for valuation, for index calculation and for the vast majority of fund benchmarking.

The session, and what happens at each end of it 

The regular session runs from the morning to the late afternoon in New York, without a break. It opens on an auction that gathers accumulated overnight orders and strikes one price at which the maximum quantity can be matched, and it ends on an auction that does the same in reverse. Between the two, the order book matches continuously.

Two extended windows sit either side of the regular session. Pre market trading runs for several hours before the open and post market trading for several hours after the close, and both are thin: fewer participants, wider quotes, less depth behind the top of the book, and prints that are more easily moved by a modest order. Company results are very often released into exactly those windows, which is why a share can appear to have moved a long way before the regular session has begun.

The reporting calendar 

US companies report quarterly, and the reports arrive in clusters. Earnings season begins a couple of weeks after each quarter ends, opens conventionally with the large banks, and runs for roughly a month, with the largest technology names concentrated in a handful of days near its middle. A report is not one number. It is the reported result, the accompanying guidance for the coming period, and a management call, and the market's reaction is driven by the distance between what arrived and what had already been priced in rather than by the absolute figures.

Alongside the company calendar sits the macroeconomic one. US inflation and labour market releases, and the Federal Reserve's scheduled rate decisions, move the discount rate applied to every future stream of company earnings, and therefore move whole sectors at once. Companies whose value rests on distant future earnings are conventionally described as more sensitive to that rate than companies whose earnings arrive nearer to the present, which is one common explanation of why a technology heavy index and an industrial heavy index diverge on the day of an inflation print.

Concentration, and the index gravity it creates 

US benchmark indices are weighted by float adjusted market capitalisation, so the largest companies carry the heaviest weights, and the largest companies have become very large indeed relative to the rest. That produces a two way gravity. A move in one of the very largest constituents drags its index with it, and a flow into or out of index tracking funds mechanically buys or sells every constituent in proportion to its weight, which pulls the largest names hardest.

The practical consequence is that a US share has a component of its daily movement that has nothing to do with the company. On days dominated by index level flow, single shares in the same benchmark move together far more than their businesses have in common. On days dominated by company news, they separate. Neither state is the normal one, and a great deal of confusion about single share behaviour comes from reading a market wide day as a company specific one.

The contract on a US share 

A CFD written on a US listed share references the consolidated price in US dollars and settles the difference in cash on a stated number of shares. Because the underlying is dollar denominated, an account funded in another currency carries a conversion when the result is booked, and that conversion is a cost of the position rather than part of the price move.

Three US specific features reach the contract. Dividends are typically declared quarterly, so the ex dividend adjustment on a US share arrives four times a year rather than once or twice. Share splits are comparatively common among the large technology names and restate the contract without changing the exposure. And the long gap between the US close and the next US open, which spans the entire Asian and European trading day, is why US shares gap: news arriving in that window is expressed all at once at the following opening auction rather than absorbed continuously. The mechanics of that auction are covered in the guide on share liquidity and the opening auction.