MARKET REPORT: CMC Markets shoots higher

CMC Markets shot higher after recent stock market volatility boosted its business. 

Shares in the spread betting company surged 12.8 per cent, or 31p, to 272.5p after reporting that the final quarter of its financial year to the end of March was the strongest of the period. 

As a result, the firm expects income for the full year will be around £280m, the top end of its guidance range and a record performance for the business outside of the pandemic period. 

CMC noted that the number of active monthly clients had remained at similar levels seen earlier in the year, while its stockbroking business in the Asia Pacific had ended the year with a record number of active customers. 

Stock market volatility picked up in early 2022 as soaring inflation and Russia’s invasion of Ukraine sparked a flurry of trading activity and prompted wild swings in the prices of stocks, energy and other assets. 

Such movements have been a boom for trading platforms such as CMC as retail investors returned to the market in a bid to cash in on the chaos. 

Despite this, the company was struggling to replicate the blockbuster success it saw during the pandemic, with annual revenues from its more profitable leveraged trading arm expected to be £230m for the year, down 34 per cent compared to 2021. The revenue decline followed a sharp drop in trading activity last summer which also weighed on the firm’s profits. 

CMC also expected its costs for the year to rise to £173m from £168m previously as it hired more staff to support its development plans. Following the strong update, analysts at broker Shore Capital predicted CMC would report a pre-tax profit for the year of around £90m, which they noted was ‘materially ahead’ of their previous estimate of £66m. The broker also retained their ‘buy’ rating on the stock. 

The FTSE 100 was up 1.6 per cent, or 117.75 points, to 7669.56, its highest level in two months, as investors shrugged off concerns over slowing growth and the ongoing Ukraine war. The FTSE 250 climbed 0.7 per cent, or 136.52 points, to 21174.32. 

The blue-chip index ended on a strong note following a turbulent week, with banking stocks helping to lead the charge higher on hopes of interest rate rises.

Lloyds gained 0.6 per cent, or 0.25p, to 44.59p, Barclays rose 2.9 per cent, or 4.02p, to 144.6p, NatWest added 1.9 per cent, or 4p, to 216.4p, HSBC bounced 1.7 per cent, or 8.6p, to 530p and Standard Chartered climbed 3 per cent, or 14.8p, to 509.2p. 

Mining stocks also received a boost as commodity prices remained elevated, with Anglo American up 4.8 per cent, or 192.5p, to 4170.5p, Glencore lifting 2.6pc, or 13.3p, to 528p, Rio Tinto rising 0.8 per cent, or 50p, to 6138p and BHP gaining 2.2pc, or 63.5p, to 3001p. Airline and package holiday firm. 

Jet 2 added 6.4 per cent, or 73.5p, to 1231.5p as it noted ‘encouraging’ bookings for the 2022 summer holidays. The firm also flagged that booking numbers had increased ‘materially’ following the UK’s decision to relax travel restrictions. But it still predicted a loss of between £378m and £383m for the year to the end of March. 

Hollywood Bowl rose 5.9 per cent, or 15.5p, to 276.5p after highlighting a record first half. 

For the six months to the end of March, the bowling alley operator’s revenues rocketed 659.4 per cent year-on-year to £91.3m as it benefited from pent-up demand as lockdown restrictions were eased. 

Meanwhile, chemical firm Johnson Matthey rose 3.7 per cent, or 70.5p, to 1965p after it expected to hit market forecasts for the year to the end of March.