The IMF released updated US growth forecasts. US growth forecasts for 2014 were lowered from 2 per cent to 1.7 per cent. 2015 growth forecasts were kept at 3 per cent -- which would be the fastest expansion since 2005. The IMF believes the Fed can keep policy rates at zero for longer than mid-2015 if inflation stays subdued.
European shares rose on Wednesday with Portugal’s stock market outperforming after news that US institutional investors bought stakes in the country's troubled lender Banco Espirito Santo. Lisbon's benchmark PSI-20 rose 1.7 per cent. The FTSEurofirst 300 index rose by 0.1 per cent, with the German Dax up by 0.2 per cent, while the UK FTSE remained flat. Australia's major miners were higher in London trade with shares in BHP Billiton up by 0.6 per cent while Rio Tinto rose 1.6 per cent.
US sharemarkets were mixed on Wednesday with biotech stocks among the biggest gainers. The Nasdaq Biotech index jumped 1.9 per cent. Tensions in Ukraine and the Gaza strip kept a lid on gains. Traders waited on Facebook and AT&T, which reports earnings after the bell. The Dow Jones index fell by 27 points or 0.2 per cent. The S&P 500 index gained 0.2 per cent while the Nasdaq rose by 18 points or 0.4 per cent.
US treasury prices edged higher for a third straight session on Wednesday on continued safe-haven demand as global tensions continued to dominate sentiment. US 2-year yields fell 1pt to 0.47 per cent while US 10-year yields fell 1 point to 2.46 per cent.
Major currencies were mixed against the US dollar following European and US sessions on Wednesday. The euro rose from highs near $US1.3455 to around $US1.3475, before ending US trade near $US1.3460. The Aussie dollar rose from lows near US94.30c to highs near US94.55c before ending the US session near its highs. And the Japanese yen traded between 101.30 yen per US dollar and JPY101.55, ending US trade near JPY101.45.
World oil prices were mixed on Wednesday as fears of possible disruptions to global oil supplies from geopolitical tensions in Eastern Europe and the Middle East continued to dominate trade. US crude stockpiles fell by a larger than expected 4 million barrels last week, while gasoline and distillate stocks rose. Brent crude rose by US76c or 0.7 per cent to $US108.13 a barrel and the US Nymex price fell by $US1.30 a barrel or 1.2 per cent to $US103.12 a barrel.
Base metal prices were mixed on Wednesday. Aluminium led the declines down 1.4 per cent while at the other end of the spectrum Tin was 0.5 per cent higher. Gold prices eased on Wednesday with the Comex gold futures quote down by $US1.60 or 0.1 per cent to $US1,304.70 per ounce. Iron ore fell by $US1.10 on Wednesday or 1.2 per cent to $US94.30 a tonne.
Ahead: In Australia no economic data is released. Flash manufacturing figures are released across the globe starting off with China.
Craig James is chief economist of Commsec.