UK and Europe
For the moment, animal spirits are back in markets. The FTSE 100 touched back above 6000 after seeing four successive daily gains for the first time this year.
A bounce back in the price of oil while the Iranian oil minister met with counterparts to discuss an output freeze coupled with the promise of more government measures to boost China’s flagging economy sent oil and basic resource stocks flying.
Still, gains in the market are on shaky ground when they’re based on the most beaten up sectors. When the biggest fallers year-to-date lead the day’s gains then it’s a short-covering rally.
Shares of Glencore (L:GLEN) topped the UK benchmark, reaching a three-month high after completing the refinancing of an important credit-line.
Glencore signed new loan commitments with banks to replace an $8.45m credit facility used for financing the day-to-day business of managing its mined commodities. The refinancing is a continuation of the company’s debt-reduction plan that hopes to wipe $13bnin debt off the balance sheet by the end of the year.
US
US market opened higher ahead of the release of FOMC minutes.
The minutes could be a little stale given Janet Yellen’s testimony already spelt out the position of the central bank relatively clearly last week.
FX
The US dollar was mixed on Wednesday ahead of the release of Federal Reserve minutes from the January meeting. Commodity currencies saw strong gains as oil and metal prices surged while European currencies saw slight declines and the yen saw a withdrawal of haven flows.
The British pound bounced off its lows of the day after data showed a surprise uptick in UK earnings for the three months ending in January. While the unemployment rate remained at 5.1% when a drop to 5.0% was expected, average earnings excluding bonuses rose to 2.0% against expectation of 1.9%.
Still, the near-term fate of the pound appears still hinged on Brexit negotiations between PM David Cameron and his European peers. Critical comments from Eastern European countries including Poland over plans to curb child benefit payments to immigrants has sent the pound reeling to a two-week low.
Commodities
The price of oil jumped by as much as 5%, reversing a sizeable chunk of the prior days losses after Iran issued its public support for the price freeze agreed between Russia and Saudi Arabia. Having rallied strongly while the meeting was held, oil prices added to gains despite uncertainty over whether Iran itself would participate in the freeze.
Gold is holding above $1200 per oz, showing relative strength during a rally in risk assets.
DISCLAIMER: CMC Markets is an execution only provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.