CMC Markets proves a bad bet as it's stymied by summer
The eerie calm in summer stock markets spelt bad news for Brexiteer multi-millionaire Peter Cruddas today as shares in his CMC Markets spread-betting empire were savaged by a profit warning.
Cruddas, CMC’s chief executive and a former Tory treasurer who floated the business in January, admitted that “low levels of volatility are providing fewer trading opportunities for clients” — leaving profits for the six months to September 30 likely to be below last year.
The warning left shares in CMC down 33.7p, or 12%, to 243.4p, taking them back to near the 240p at which they floated and knocking £55 million off the value of his personal 57% stake.
Shares in larger rival IG Group also suffered, losing 45.5p, or 5%, to 899.5p.
Spread-betters thrive on movements in shares and currencies, but central bank interventions — such as that by the Bank of England after Brexit — have smoothed potential turmoil so far in a calm summer for the stock market.
The Vix volatility index, known as Wall Street’s “fear index”, dipped to less than 12 — close to a 20-year low — compared with a spike to more than 27 in January in turbulent market conditions.
CMC is confident profits will improve in the second half of the financial year and stressed new client numbers were up 19% on last year in the five months to August.
