Yahoo Finance CME Group (CME) Reports Soft May Volumes, Shares Decline
CME Group Inc. CME reported unimpressive average daily volume (ADV) for May 2020. Average daily volume of 17.9 million contracts per day was down 25% year over year attributable to lower volumes in five of the six product lines. There were 20 trading days in May this year versus 22 days in May 2019. Shares of the company lost 1.9% in the day’s trading in response to the soft volumes.
Interest rate volume of 8.2 million contracts per day decreased 41%. Energy volume of 2.4 million contracts decreased 7% year over year. Foreign exchange volumes dropped 22% to 0.6 million contracts per day. Agricultural volume of 1cmillion contracts per day declined 47% year over year while Metals volume of 0.6 million contracts per day decreased 11%. However, Equity index volume of 5.2 million contracts per day increased 23%.
Though May volumes decreased, we expect the company’s operating leverage and compelling suit of products to help CME Group to record higher volumes going forward. CME Group maintains a solid market share of about 90% in global futures trading and clearing services.
Expansion of futures products in the emerging markets plus an increase in non-transaction related opportunities as well as OTC offerings should continue to contribute modestly to its top-line growth in the years ahead.
Increasing electronic trading volume adds scalability and hence leverage to CME Group’s operating model. Efforts to expand and cross-sell through strategic alliances, acquisitions, new product initiatives and a strong global presence should also drive growth.
Shares of CME Group have underperformed the industry year to date. The stock has lost 11% against the industry’s increase of 2.6%. Nevertheless, its solid fundamentals will likely help the stock retain its growth momentum.
CME Group currently carries Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Recently, Nasdaq NDAQ reported missed volumes for the month of May. While U.S. equity options volume increased 17.5% year over year to 181 million contracts, European options and futures volume decreased 37.9% year over year to 5.4 million contracts. MarketAxess Holdings’s MKTX trading volume for May 2020 of $519.7 billion consisted of $229.3 billion in credit volume and $290.5 billion in rates volume.
Another Stock to Consider
Intercontinental Exchange ICE, a leading global operator of regulated exchanges, clearing houses and listings venues, and a provider of data services for commodity, financial, fixed income and equity markets, carries a Zacks Rank #2. The company delivered 4.07% positive earnings surprise in the last reported quarter.
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Intercontinental Exchange Inc. (ICE) : Free Stock Analysis Report
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