In US economic data, the trade deficit narrowed by 7 per cent to $41.5 billion in June. The smaller deficit was driven by a fall in petroleum imports to a three-year low. Analysts had expected the trade deficit to widen.
European shares fell on Wednesday in response to further tensions along the Russia/Ukraine border. Economic data across the region was also weaker. Eurozone factory orders fell 10.4 per cent driven by weakness in Europe's largest economy, Germany -- where industrial orders fell by 3.2 per cent, the biggest fall in almost 3 years. Italian GDP fell by 0.2 per cent unexpectedly pushing the economy back into recession. The FTSEurofirst 300 index fell by 0.8 per cent with the German Dax down by 0.7 per cent while the UK FTSE lost 0.7 per cent. Italy's FTSE MIB lost 2.7 per cent. Australia's major miners were higher in London trade with shares in BHP Billiton up 1.1 per cent while Rio Tinto gained 1.2 per cent.
US sharemarkets ended mildly higher in a choppy trading session on Wednesday. Equities recovered from an initial sell-off, after finding technical support around the S&P 500's 100-day moving average. However modest gains were once again eroded in late trade. The S&P Telco sector led the weakness sliding 1.5 per cent. Twenty-first Century Fox rose 4.7 per cent after pulling its $80 billion offer to buy Time Warner. Time Warner shares fell 12.3 per cent. The Dow Jones index ended higher by 14 points or 0.1 per cent with the S&P 500 index largely unchanged while the Nasdaq gained 2 points or 0.1 per cent
US treasury prices lifted on Wednesday (yields lower) as political tensions over Ukraine drove safe-haven demand. US 2-year yields fell by 2 points to 0.46 per cent while US 10-year yields fell 1 point to 2.47 per cent.
The euro and commodity currencies eased in early European trade before recovering late in the US session on Wednesday. The euro touched early lows near $US1.3335 before lifting to highs around $US1.3385, and ending US trade near $US1.3380. The Australian dollar fell to early lows near US92.95c before lifting to highs near US93.65c, ending the US session near US93.45c. And the Japanese yen strengthened from 102.60 yen per US dollar to JPY101.85, ending US trade near JPY102.05.
World oil prices were mixed on Wednesday. Brent lifted from a nine-month low amid concerns over conflict in Ukraine, while ample supply in the US kept the Nymex price under pressure. Brent crude rose by US19 cents or 0.2 per cent to $US104.80 a barrel and the US Nymex price fell by US46 cents to $US96.92 a barrel.
Base metal prices were mixed on Wednesday with copper falling 1.2 per cent to a five-week low, driven by a stronger US dollar. Similarly zinc also lost 1.2 per cent. However nickel bucked the trend lifting by 1.7 per cent. Gold prices rose on Wednesday supported by safe-haven buying. Comex gold futures quote rose by $US22.90 or 1.8 per cent to $US1,308.20 per ounce. Iron ore rose by US40c on Wednesday or 0.4 per cent to $US95.90 a tonne.
Ahead: In Australia, employment data is scheduled. In the US, consumer credit is released.
Craig James is chief economist at Commsec.