FMX-owner BGC's profit jumps on rates, energy trading (updated)

Bgc

30/04/2024 17:00

(Adds CEO quote in paragraphs 3-4, share price performance in
paragraphs 5-6,  FX market volume in paragraph 9)
    By Niket  Nishant and Laura Matthews
       April 30 (Reuters) - BGC Group's  BGC.O  first-quarter
profit nearly doubled, it said on Tuesday, as investors looking
to navigate the uncertainty around monetary policy pushed
trading volumes higher in the brokerage's rates and energy
businesses.
    The strong report comes less than a week after the company's
FMX exchange, which is looking to take on derivatives trading
giant CME Group  CME.O , secured a minority investment from 10
financial market giants including Bank of America  BAC.N ,
Goldman Sachs  GS.N  and JPMorgan Chase  JPM.N .
        "We have built the fastest growing U.S. Treasury
platform and now with the support of our partners, FMX is the
only competitor to CME," BGC Chief Executive Howard Lutnik told
analysts on a call.
    The partners invested $172 million, valuing FMX at $667
million. Lutnik said the move will help to increase market share
in Treasury and foreign exchange as the investment is a
validation of "our technology and our vision to reshape the U.S.
interest rate markets."
    BGC's shares fell 3.5% to $7.90 on a day of weakness in the
broader markets as caution prevailed among investors ahead of
the Federal Reserve's interest rate decision.
    "The stock has done quite well relative to other exchanges
over last 6 months so (there) maybe just some profit taking as
the broader market sells off today," said Andrew Bond, managing
director and senior fintech analyst at Rosenblatt Securities. 
    Investors are hotly debating the trajectory of rate cuts
after discouraging signs in the latest inflation and gross
domestic product data, which have raised fears that the Federal
Reserve may have to keep monetary policy tighter for longer.
    The uncertainty has prompted traders to actively rejig
portfolios across asset classes to maximize returns and hedge
against risk. 
    Revenue in BGC's rates unit jumped 6.3%, while that of the
energy, commodities and shipping business rose 32.1% from a year
ago.
    Foreign exchange revenue also rose 4.8% to $84 million,
boosted by higher volumes across emerging market currencies and
options.
    Net income jumped to $46.4 million, or 10 cents a share, for
the three months ended March 31, from $24.2 million, or 5 cents
per share, last year.

 (Reporting by Niket Nishant and Laura Matthews; Editing by
Shailesh Kuber and Emelia Sithole-Matarise)
 ((Niket.Nishant@thomsonreuters.com;))