US MORNING REPORT (7am AEDT)
In US economic data, the weekly mortgage market index fell by 2.1%, from 381.4 to 373.3, led by refinancing. The purchase index only fell from 169.6 to 168.8.
Reserve Bank New Zealand has lifted the cash rate by 25 basis points to 2.75% as widely expected.
European shares fell on Wednesday on nervousness about the state of the Chinese economy and the political situation in Ukraine. Shares in exporters and companies most exposed to Ukraine led the declines. The FTSEurofirst 300 index fell by 1.1% with the UK FTSE lower by 1.0%, and the German Dax was down by 1.3%. Mining shares were mixed in London trade with shares in BHP Billiton down by 1.0% while Rio Tinto rose by 0.6%.
US sharemarkets were mixed on Wednesday, but off the weakest levels of the day, on hopes for diplomatic efforts to ease tensions in Ukraine. Reuters reports that ´´US Secretary of State John Kerry will meet with his Russian counterpart Sergei Lavrov in London on Friday ahead of a referendum Sunday on whether the Ukraine´s Crimean peninsula will join Russia or go independent.´´ After being down 91 points, the Dow Jones index closed lower by 11 points or 0.2%. However, the S&P 500 rose by 0.6 points while the Nasdaq gained 16 points or 0.4%.
US longer-term treasury prices rose on Wednesday (yields lower) as investors continued to drift towards safe-haven assets like gold and government bonds in response to the tensions in Ukraine. Treasury sold $21 billion in 10-year notes on Wednesday and will sell $13 billion in 30-year bonds on Thursday. US 2 year yields fell 2 points to 0.366% while US 10 year yields fell by 5 points to 2.72%.
Major currencies rose against the greenback in European and US trade on Wednesday. The Euro rose from lows from near US$1.3840 to US$1.3905 and ended US trade around US$1.3905. The Aussie dollar rose from near US89.25c to highs near US89.90c and was around the highs at the US close. And the Japanese yen lifted from near 103.00 yen per US dollar to JPY102.54 and was near JPY102.71 at the US close.
World oil prices fell on Wednesday after the US Department of Energy made a surprise announcement of plans to sell 5 million barrels of crude from the Strategic Petroleum Reserve. In addition, latest data showed a large lift in US crude stocks in the latest week. Brent crude fell by US53c or 0.5% to US$108.02 a barrel while US Nymex crude fell by US$2.04 or 2.0% to US$97.99 a barrel.
Base metal prices rose up to 0.6% on the London Metal Exchange on Wednesday with copper and nickel leading the gains. But zinc and lead bucked the trend, down 1.1% and 0.5% respectively. The Comex gold futures price rose to a six-month high, up by US$23.80 an ounce or 1.8% to US$1,370.50 per ounce. Iron ore rose by US$2.50 or 2.3% to US$107.40 a tonne.
Ahead: In Australia employment data is issued. In China, retail sales, production and investment will be released at 4.30pm AEDT. In the US retail sales, export and import prices and weekly jobless claims data are expected.
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