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Could Interactive Brokers Impress Market Participants in Q2?

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What could help brokerages going forward?

We’re almost halfway through the current year, and market dynamics seem to have supported brokerages (VFH). In the first quarter, trade tensions and interest rate expectations intensified market volatility, boosting brokerages’ trading volumes. In the second quarter, the volatility seems to have continued despite markets being helped by a strong earnings season.

The recently published jobs report suggest that the US economy has strengthened. Market participants will likely be watching for developments from the Fed’s meeting on June 12 and 13, where a rate hike is expected to be announced, and the Fed may indicate that it will hike rates faster than anticipated due to the improving economy. These factors could boost market volatility, benefiting Charles Schwab (SCHW), TD Ameritrade (AMTD), E*TRADE Financial (ETFC), and Interactive Brokers (IBKR).

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Why IBKR stock has been falling

Despite the abovementioned positive factors, Interactive Brokers had fallen 7.9% in five days as of June 6, possibly due to its daily average revenue trades falling 4% month-over-month in May. This decline could impact IBKR’s second-quarter results by deteriorating its commission revenue.

Of Interactive Brokers’ 517,000 client accounts at the end of the first quarter, 33% were from Asia, while 25% were from Europe and Africa. The Americas comprised the remaining 42%. Over the past three years, the company’s Asian account growth has seen upward momentum.

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