Daily average revenue trades
On July 11, the US markets had negative momentum after the Trump administration announced tariffs on $200 billion of Chinese imports. If trade tensions keep rising, trading activity could continue. Daily average revenue trades (or DARTs) are impacted by a variety of factors, including interest rate expectations, investor confidence, and market volatility.
In the first quarter, the primary driver of brokerages’ (VFH) performances was market volatility. The higher the volatility, the more the DARTs. In the second quarter, the markets saw lower volatility, which could result in lower trading volumes for brokerages. Interactive Brokers Group (IBKR) saw DARTs of 797,000 in the second quarter, which implies a sequential fall. However, on a YoY (year-over-year) basis, DARTs rose 19.1%.
What to expect
Equities are expected to fluctuate in the second half of 2018, which could boost brokerages’ trading volumes for July. However, investors generally avoid stocks when the markets are volatile. They could deploy their capital in assets, which carry a lower risk. As a result, Charles Schwab (SCHW) could see an uptrend in inflows for Schwab money market funds.