FXCM and Gain Capital rise while equities, oil and Euro all dive

The first real trading day of 2015 (not counting the light post New Years session on Friday) saw the year kick off in the red Monday, and with heightened volatility across all instrument types:

  • The Dow Jones Industrial Average (INDEXDJX:.DJI) dropped 331 points and the S&P 500 (INDEXSP:.INX) was off 37, marking a more-than 1.8% fall in each index.
  • Oil dropped briefly below $50 a barrell, its lowest level since 2009.
  • The EURUSD hit a nine year low, scraping the 1.19 level.

FXCm and Gain share price riseBut shares of Forex brokers bucked the trend Monday, with FXCM Inc (NYSE:FXCM) rising 2% and Gain Capital Holdings Inc (NYSE:GCAP) up marginally 0.2%, following a Zacks Investment Research upgrade of Gain to its highest ranking, a Zacks Rank #1 (Strong Buy).

Zacks cited rising earnings estimates for Gain following the announcement of strong retail metrics in the first two months of the December quarter.

Zacks already had FXCM rated as a Strong Buy.

We’d like to think that, beyond the Zacks comments, stock market investors are beginning to ‘get it’ when it comes to shares of the Forex brokers. That is, their underlying businesses do well during periods of high volatility. A day when the stock market drops more than 1% and currencies bounce around is no longer a reason for shares of FXCM and GCAP to be dragged down with the rest of the market.

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