In US economic data, retail sales fell by 0.3 per cent in September -- the first decline since January. Stripping out gasoline, auto sales, building material and food services (a key gauge of discretionary spending), sales still fell 0.2 per cent, against expectations of a lift. US producer prices fell by 0.1 per cent in September to be up 1.6 per cent over the year. US business inventories rose by 0.2 per cent in August against expectations of a 0.4 per cent lift.
The Fed beige book, a gauge of economic conditions across 12 Fed districts, found that the economy was strengthening in most regions from a modest to moderate pace. Boston was the only district where activity was described as mixed. Businesses reported a lift in employment, although some regions found it difficult to obtain skilled labour.
European shares slumped on Wednesday, with selling accelerating in late trade. No sector was spared, but, energy stocks were hit hard with the oil price holding near four-year lows. The STOXX Europe 600 energy sector lost 3.4 per cent, now down more than 20 per cent since late June. The FTSEurofirst 300 index lost 3.2 per cent, its biggest one-day slide since late 2011. The UK FTSE lost 2.8 per cent and the German Dax lost 2.9 per cent. And Australia's major miners were weaker in London trade with shares in BHP Billiton down by 2.3 per cent while Rio Tinto lost 2.9 per cent.
US sharemarkets dropped sharply on Wednesday but were off their lows with a modest recovery late in the session. Subdued Chinese inflation and weak US retail sales heightened global growth concerns and deflation. The CBOE Volatility index (Vix) rose by 8.5 per cent. Bank of America lost 4.8 per cent after posting results. Earlier in the session, the Dow Jones was down 456 points before closing down 173 points or 1.1 per cent; the S&P 500 index was down by 0.8 per cent and the Nasdaq lost 12 points or 0.3 per cent.
US treasury prices rose on Wednesday (yields lower), driven by concerns about slowing global growth and deflation. US two-year yields fell by 6 point to 0.32 per cent while US 10-year yields were down 6 points to 2.14 per cent.
Major currencies rallied against the greenback over the European and US session on Wednesday. The Euro rose from lows near $US1.2625 to highs near $US1.2830, ending US trade near $US1.2805. The Aussie dollar rose from lows near US87.10c to highs around US88.50c, ending the US session near US88.10c. While the Japanese yen held between ¥107.50 per US dollar to ¥105.25, ending US trade near ¥106.05.
World oil prices fell edged closer to fresh four-year lows on Wednesday, on fears that weak global growth will hurt oil demand. Brent crude fell by $US1.26 or 1.5 per cent to $US83.78 a barrel while the US Nymex crude price fell by US6c or 0.1 per cent to $US81.78 a barrel.
Base metal prices were substantially weaker on Wednesday with Nickel (down 3.2 per cent) leading the declines, followed by zinc (down 2.9 per cent) and copper (down 2.5 per cent). Gold rose on safe-haven demand, with the Comex gold futures quote up by $US10.50 an ounce or 0.9 per cent to $US1,244.80 per ounce. Iron ore fell by US90c to close at $US82.20 a tonne.
Ahead: In Australia, Assistant Reserve Bank Governor Debelle is a panel participant in Sydney. In the US, industrial production, capacity utilisation and the NAHB housing market index are released.