In US economic news, retail sales were flat in July, short of the expected 0.2 per cent gain. Excluding autos, sales rose 0.1 per cent, again short of forecasts for a 0.4 per cent gain. The mortgage market index fell by 2.7 per cent in the latest week, dragged down by a 4 per cent fall in refinancing. Business inventories rose by 0.4 per cent as expected in June.
European shares rose on Wednesday. While eurozone production fell by 0.3 per cent in June, the decline was attributed to ongoing geopolitical issues, especially Ukraine. The FTSEurofirst 300 index rose by 0.3 per cent boosted by gains of utility E.ON and insurer Swiss Life. The German Dax was up 1.4 per cent and the UK FTSE edged up 0.4 per cent. Australia's major miners were mixed in London trade with shares in BHP Billiton up 0.2 per cent while Rio Tinto was lower by 2.6 per cent.
US sharemarkets rose on Wednesday despite weak sales figures pushing down the share prices of retailers. The Health Care sector led the gains in the broader S&P 500 index. The Dow Jones index rose by 91 points or 0.6 per cent with the S&P 500 index up by 0.7 per cent while the Nasdaq gained almost 45 points or 1.0 per cent.
US treasury prices were firmer (yields lower) in response to softer-than-expected economic data. Thomson Reuters also reported that "Wednesday's $24 billion in 10-year notes was met with solid demand." US Treasury will sell $16 billion of 30-year bonds on Thursday. US 2-year yields fell by 3 points to 0.416 per cent while US 10-year yields fell by 4 points to 2.415 per cent.
Major currencies were volatile against the US dollar over the European and US sessions on Wednesday but ended US trade a little firmer. The euro rose from lows near $US1.3345 to around $US1.3415 before ending US trade near $US1.3365. The Australian dollar rose from lows near US92.75c to highs near US93.20c, ending the US session near US93.05c. The Japanese yen traded in a range between 102.22 yen per US dollar to JPY102.52, ending US trade near JPY102.43.
World oil prices rose on Wednesday. Brent recovered from a 13-month low on investor concern about possible disruptions to oil supplies as a result of turmoil in Iraq and Libya. Nymex crude rose only modestly after the Energy Information Administration said that stockpiles rose by 1.4 million barrels last week. Brent crude rose by $US1.26 or 1.2 per cent to $US104.28 a barrel while the US Nymex price edged higher by US22 cents a barrel to $US97.59 a barrel.
Base metal prices were lower on Wednesday by up to 2.1 per cent with lead and zinc leading the declines. Gold prices rose modestly on Wednesday against a softer greenback with the Comex gold futures quote up by $US3.90 to $US1,314.50 per ounce. Iron ore fell by US80c on Wednesday or 0.9 per cent to $US93.20 a tonne.
Ahead: In Australia, average weekly earnings figures are released. Telstra releases its profit result. In the US, the weekly data on claims for unemployment insurance are issued together with import and export price data.
Craig James is chief economist at Commsec.