In US economic data, new home sales surged by a surprising 18 per cent in August to a seasonally adjusted rate of 504,000 units -- the highest level in six years. Despite the rise in sales the stock of new houses lifted to a four-year high. At August's sales pace it would take 4.8 months to clear the supply of houses on the market.
European shares rose for the first time in three sessions on Wednesday after data showed that Italian consumer confidence had risen for the first time in four months. Encouraging comments from ECB president Draghi also supported buying. Speaking in a French radio interview, Draghi said the ECB would maintain loose monetary policy till inflation lifts from near zero towards the ECB target of 2 per cent. The FTSEurofirst 300 index rose by 0.8 per cent. The German Dax rose by 0.7 per cent while the UK FTSE gained 0.5 per cent. And Australia's major miners were higher in London trade, with shares in BHP Billiton up by 3.2 per cent while Rio Tinto gained 2.4 per cent.
US sharemarkets rallied on Wednesday as better economic data and dovish Fed speeches supported sentiment. Chicago Fed president Evan said the central bank should be "exceptionally patient" in shifting monetary policy. The gains were broad-based with the S&P 500 snapping a three-day losing streak and lifting above its 14-day moving average. The Dow Jones index rose by 154 points or 0.9 per cent. The broader S&P 500 index rose by 0.8 per cent while the Nasdaq gained 47 points, or 1 per cent.
US treasury prices fell on Wednesday (yields higher) as upbeat US data supported the bid for risk assets. Weak demand for the auction of $35 billion in five-year notes added to the lift in yields. US two-year yields rose by 5 points to 0.59 per cent while US 10-year yields rose by 4 points to 2.57 per cent.
Major currencies were mostly weaker against the greenback over the European and US sessions on Wednesday. The euro fell from highs near $US1.2865 to around $US1.2775, ending US trade near $US1.2780. The Australian dollar fell from highs near US88.95c to lows around US88.50c before ending the US session near US88.75c. The Japanese yen weakened from ¥108.50 per US dollar to ¥109.05, ending US trade near ¥109.00.
World oil prices reversed early losses in a choppy trading session on Wednesday following news that US crude stockpiles fell by 4.3 million barrels last week, against expectations of a build. Brent crude touched a two-year low before closing up by US32c or 0.3 per cent to $US97.17 a barrel, while the US Nymex price rose by $US1.24 a barrel or 1.4 per cent to $US92.80 a barrel.
Base metal prices were mostly higher on Wednesday with Nickel (up 1.6 per cent) leading the gains. Other metals rose between 0.1 per cent-1.1 per cent. Gold prices fell on Wednesday with the Comex gold futures quote lower by US$2.50 an ounce or 0.2 per cent to US$1,219.50 per ounce. Iron ore was unchanged on Wednesday at US$79.40 a tonne.
Ahead: In Australia, population data, financial accounts and job vacancies are released. RBA governor Glenn Stevens speaks at the Melbourne Economic Forum. In the US, durable goods orders are released.
Craig James is chief economist at Commsec.