What To Watch For In CME’s Q1 Earnings

by Trefis Team
CME Group
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CME Group‘s (NASDAQ:CME) performance in 2016 was strong, but we expect the exchange’s momentum to slow a bit when it reports its first quarter earnings on April 27. The exchange’s trading volumes were only marginally up in Q1 2017 compared to the same quarter last year. This was primarily because of a tough year-on-year comparison due to the volatility seen in the global economy at the beginning of 2016 resulting from uncertainty around oil prices, a slowdown in China and slow GDP growth in the U.S. at the time. As trading commissions generate a majority of CME’s overall revenue, the slowdown could meaningfully impact its top line for the quarter.

We believe CME’s global footprint and its diverse product line have worked in its favor in recent quarters. Among the various asset classes, interest rate derivatives had the highest trading volumes, and grew by 11% during the quarter, driven by the Fed’s interest rate hikes in December 2016 and March 2017. The continuous shift in gold and silver prices – due to the strengthening of the U.S. dollar and other economic and political factors in the U.S. – has continued to boost metals derivative volumes.


However, equities and foreign exchange derivative volumes continued to decline, primarily due to a more volatile and favorable trading period last year, and partly due to investors remaining wary of these asset classes. Energy derivatives saw a decline for the first time over the past couple of years. Without much movement in oil prices, and OPEC’s stance on capping production, the asset class hasn’t seen much trading activity of late.

See the full Trefis analysis for CME Group.

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