On a day when global equity markets took a deep dive, giving back much of the gains seen over the past two weeks, shares of UK-based CFDs broker CMC Markets bucked the trend and rose by 29%, hitting multi-year highs.

At 259p, CMC shares haven’t seen these levels since mid-2016, when a series of poor results announcements followed by the 2018 client leverage restrictions brought CMC shares down to just the 77p range early last year.

CMC Markets share price graph, past five years. Source: Google Finance.

After announcing second half results which the markets clearly liked, investors seem much more bullish on CMC’s future.

What’s interesting about the move is that the results were somewhat expected. CMC had earlier issued a Trading Update (on April 3) basically releasing its revenue figures and operating costs – so there really wasn’t too much of a surprise in what CMC revealed yesterday.

Also interesting is that a similarly rosy report issued by CMC rival IG last week didn’t move the needle much, with IG’s share price actually falling slightly (but less than 1%) on that day.

It seems as though two things were at play here with CMC. First, CMC’s outlook for its 2021 Fiscal Year (which began on April 1) was very strong. CMC in its report indicated that “CFD gross client income at the start of the financial year has been around double that during the same period in the prior financial year and client income retention remains strong.”

Second, the markets had been somewhat hard on CMC in the past few years, as we noted above, and yesterday’s rise seems in part a sort of “catch-up” to its rivals IG and Plus500, which trade at much loftier valuations. (CMC’s market cap even after yesterday’s move is about £750 million. Plus500 is valued at £1.3 billion , and IG at £2.9 billion).

The question now is whether CMC can maintain its momentum of client activity (and revenues and profits….) as markets at some point settle back down and volatility eventually wanes.