What To Watch For In CME’s Q2 Earnings

Despite an unimpressive Q1, we expect CME Group (NASDAQ:CME) to announce strong Q2 earnings when it reports on August 1st. Consensus estimates suggest nearly 3% growth in the exchange operator’s revenue and 7% growth in its EPS. Increased volatility in the derivatives market across multiple asset classes – including oil, metal and interest rates – has attracted investors’ attention. This drove nearly 7% growth in trading volumes for the quarter. We believe CME’s efforts to expand its global footprint and its diverse product line to suit investor demand are likely to boost its top line.

Among the various asset classes, interest rate derivatives had the highest trading volumes, and grew by 19% during the quarter, driven by the Fed’s interest rate hikes in March and June. The continuous movements 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. Energy derivatives saw improved volumes as OPEC’s stance on capping production led to price volatility throughout the quarter. 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.

The company remains bullish on its market data and information services segment, with new products in the pipeline with enhanced business intelligence and machine learning capabilities. We expect that customers will continue to use these services even as the company increasingly charges for them. This should help boost the top line.

See the full Trefis analysis for CME Group.

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