Stock trader CME’s quarterly profit beats expectations as demand for hedging soars By Reuters

© Reuters. FILE PHOTO: Men enter the offices of the CME Group in New York, U.S., October 18, 2017. REUTERS/Brendan McDermid

By Sohini Podder and John McCrank

(Reuters) – CME Group Inc reported quarterly profits on Wednesday that beat Wall Street expectations as investors turned to the futures trader’s products to hedge against market volatility spurred by the rising interest rates and Russia’s invasion of Ukraine.

Demand for CME interest rate futures surged in the quarter, with average daily volumes up 21% year-on-year, as the US Federal Reserve raised its rate in March benchmark for the first time since 2018, with a series of further rate hikes in the cards due to soaring inflation.

With Russia’s war on Ukraine rocking markets during the quarter, average daily volumes for the CME stock index jumped 30%, options volumes rose 32%, energy futures rose 6% and currency futures rose 6%.

“We see what can happen when people have to manage risk in real time,” CME chief executive Terry Duffy said in a call with analysts. “We have seen, and no one saw coming,” unprecedented events over the past 6 to 12 weeks around the world, he said.

CME earned $2.11 a share in the first quarter, 11 cents above analysts’ average estimate, according to Refinitiv IBES data.

Higher-than-expected revenue due to higher prices led the pace, Piper Sandler analyst Rich Repetto said in a note to clients.

Total revenue increased 7.4% to $1.3 billion.

Shares of Chicago-based CME rose 6% to $226.05 early Wednesday.

Net income attributable to the company reached $711 million, or $1.95 per share, in the three months ended March 31, from $574.4 million, or $1.60 per share, a year earlier. early.

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