European equities are on track for a strong finish to a big week. Federal Reserve minutes that displayed caution amongst board members over raising rates could prompt the biggest weekly gain in European shares since January. Investors adore these Fed minutes because they signal a strong economy and low rates. If the decision was “a close call” then the message is that the Fed feels good about the US but is just being cautious over emerging markets. The German DAX, French CAC and the UK’s FTSE 100 were all showing gains early on Thursday with the UK’s main benchmark on track for its biggest weekly gain in four years. The basic materials sector was well ahead of the pack and driving gains on the FTSE 100. A zinc output cut from Glencore drove metal prices higher while dovish Fed minutes caused a drop in the dollar, increasing the value of commodities. The drop in global zinc supply that will result from Glencore’s production-cut caused a spike in zinc prices which spread to other precious and industrial metals on the possibility other miners may choose to follow suit. The zinc output-cut means less revenue for Glencore but was seen as a positive step by the company to reduce its worryingly high debt pile. The record 29% daily drop last Monday is now firmly in the rear-view mirror with Glencore shares now up over 90% from the lows. Admiral Group shares were top risers after a survey revealed car insurance premiums rose by 4.8% in the last quarter, the biggest rise since 2010. Sports Direct was bottom of the index with the company’s intended acquisition of Irish department stores Heatons seen as a misuse of cash and a step in the wrong direction by markets. A mixed start is expected for US stocks as the major indices consolidate the strong gains resulting from the dovish Fed minutes that suggest a longer period of low rates. USA pre-opening levels S&P 500: 1 point lower at 2,012 Dow Jones: 5 points higher at 17,055 Nasdaq 100: 4 points lower at 4,346 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.
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