Federal Reserve Chair Janet Yellen delivered a speech at an IMF conference in Washington. She believes that raising interest rates to fight asset bubbles would be a bad idea, instead she argued better regulation would mitigate financial risk.
In US economic data, ADP Private Payrolls lifted by 281,000 in June -- marking the biggest increase since late 2012 and well ahead of the 200,000 jobs that had been expected.
European shares inched higher on Wednesday, adding to the previous session’s rally. Automakers were among the top gainers, after data showed strong US monthly retail sales. Daimler rose by 0.8 per cent and BMW gained 0.6 per cent. The FTSEurofirst 300 index rose by 0.2 per cent, the German Dax gained 0.1 per cent while the UK FTSE rose 0.2 per cent. Australia's major miners finished higher in London trade with shares in BHP Billiton up by 0.7 per cent while Rio Tinto rose by 1.2 per cent.
US sharemarkets were mildly higher on Wednesday, as the positive private sector employment read was not enough to trigger a fresh round of buying. Investors waited on the closely watched non-farm payrolls figures released on Thursday. Volumes were low with the S&P 500 trading in a range of just 0.2 per cent -- the fourth narrowest margin since 1982. The S&P utilities sector fell 2 per cent -- its biggest one day decline in a year. The Dow Jones rose by 20 points or 0.1 per cent with the S&P 500 index up just 0.1 per cent and the Nasdaq closed flat.
US treasury prices fell on Wednesday (yields higher) after traders reacted to the robust private sector jobs report. US 2-year yields rose 1 point to 0.48 per cent while US 10-year yields rose by 6 points at 2.63 per cent.
Major currencies fell against the US dollar on Wednesday. The euro fell from highs $US1.3680 to lows near $US1.3640, closing US trade near $US1.3655. The Australian dollar fell from highs near US94.65c to lows near US94.30c and ended US trade near US94.35c. And the Japanese yen eased from 101.35 yen per US dollar to JPY101.85, ending US trade near JPY101.75.
World oil prices eased on Wednesday on encouraging signs about supply from Libya and Iraq. Libyan export capacity looked to recover by around 500,000 barrels per day as rebels blockading eastern oil ports agreed to reopen the remaining two terminals. Oil pared some of the losses after US inventory data showed a larger-than-expected 3.2 million drawdown in US crude stockpiles last week. Brent crude fell by $US1.05 or 0.9 per cent to $US111.24 a barrel. While the US Nymex price closed lower by US86c or 0.8 per cent to $US104.48 a barrel.
Base metal prices were higher on the London Metal Exchange on Wednesday. Zinc rose by 2.9 per cent while nickel lifted by 2.7 per cent. The Comex gold futures quote rose by $US4.30 an ounce or 0.3 per cent to $US1,330.90 per ounce. Iron ore rose by US50c a tonne or 0.5 per cent to $US94.70 a tonne.
Ahead: In Australia, retail sales and building approvals figures are released. RBA Governor Stevens speaks in Hobart. In the US, non-farm payrolls and the ISM non-manufacturing survey are released.
Craig James is chief economist at Commsec.