US retail sales fell by 0.5pct in June after a 1.1pct fall in May. Excluding autos, sales fell 0.1pct. Economists had tipped a 0.2pct fall in sales (ex autos unchanged). Other data showed that import prices fell by 1.3pct in June while business inventories rose by 0.1pct in May.

US Federal Reserve members modestly cut economic growth estimates at the last meeting and indicated that ´´further policy stimulus might become appropriate if the outlook were to worsen appreciably.´´

European shares fell for the first day in seven with strength in technology stocks offset by weakness in banks. The FTSEurofirst index rose by 0.03pct, but while the UK FTSE eased 0.3pct, the German Dax edged 0.3pct higher.

US sharemarkets strengthened in late trade to close largely flat. Technology stocks rose while banks eased with Intel up 1.7pct and Citigroup down 2pct. The Dow Jones gained 40 points in the last 15 minutes of trade to finish almost 4 points higher. The S&P 500 eased by less than 0.1pct while the Nasdaq gained almost 8 points or 0.4pct.

US treasuries rose on Wednesday (yields lower) in response to weaker economic data and a downbeat statement from the Federal Reserve. In addition an auction of US$13 billion of 30-year bonds met with solid demand. US 2yr yields fell by 5 points to 0.61pct with US 10yr yields down 1 point to 3.05pct.

The US dollar lost ground against the Euro and commodity currencies after the release of weak US economic data. The Euro rose from lows around US$1.2680 to US$1.2775, before ending US trade near US$1.2735. The Aussie dollar lifted from lows near US87.85c to near US88.70c, ending the US session near US88.30c. And the Japanese yen strengthened from 89.00 yen per US dollar to JPY88.10, ending US trade near JPY88.40.

US crude oil prices eased modestly with softer economic figures modestly outweighing data showing lower US oil stocks in the latest week. The US Energy Information Administration reported that crude inventories fell by 5.06 million barrels in the latest week. The Nymex crude oil contract fell by US11c to US$77.04. But London Brent crude rose by US12c to US$76.77 a barrel.

Base metal prices were mixed on the London Metal Exchange on Wednesday as traders awaited key Chinese economic data. Nickel and lead lost 0.8pct while other metals rose 0.2-0.8pct. But the price of gold rose modestly as the greenback fell. The Comex gold price rose by US$3.00 an ounce to US$1,216.50 with a range of US$1,206.10 to $1,218.20.

Ahead: In Australia, data on car sales in released. In China key economic data, including economic growth, is released. In the US, data on producer prices and production are released

Craig James, Chief Economist of Comsec

Provided by Comsec.com.au