The Federal Reserve cut its forecast for US economic growth, following the FOMC meeting. The Fed downgraded 2011 growth from the range of 3.1-3.3pct to 2.7-2.9pct. Growth in 2012 was also downgraded to 3.3-3.7pct. In its policy statement the Fed confirmed it will be ending its $600 billion bond-buying program at the end of the month, but will maintain rates at exceptionally low levels for an extended period. The Fed´s inflation forecast was little changed at 2.3-2.5pct for 2011.

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European shares fell on Wednesday on concerns about the US economic recovery. Greece sovereign debt issues continued to linger after European governments summoned banks and insurers - urging them to share the cost of a second Greek bailout with taxpayers. Banking stocks gave back some of the prior sessions gains. The FTSEurofirst index fell by 0.5pct with the German Dax lower by 0.1pct and the UK FTSE down 2pts.

US sharemarkets fell on Wednesday after the Federal Reserve acknowledged the sluggish pace of the recovery and gave no hint of a further plans for stimulus. The Fed said the recovery was proceeding more slowly than expected, prompting investors to take profits after the four prior sessions of gains. Among the gainers FedEx Corp rose 2.6pct after reporting a strong fourth-quarter profit and forecast robust 2012 earnings. The Dow Jones fell by 80pts or 0.7pct with the S&P 500 down 8pts or 0.7pct and the Nasdaq lost 18pts or 0.7pct.

US treasuries were broadly unchanged on Wednesday as the worries over Greece were offset by no hint of new stimulus by the US Fed. US 2yr yields were flat at 0.374pct and US 10yr yields fell by 1pt to 2.978pct.

The US dollar rallied against major currencies after the Fed gave no indication of providing further stimulus. The Euro fell from highs near US$1.4440 to US$1.4340, ending US trade near its lows. The Aussie dollar fell from highs near US106.40c to US105.65c, ending US trade near its lows. And the Japanese yen traded in a tight range between 80.00 yen per US dollar and around JPY80.35 ending US trade near JPY80.30.

US crude oil prices rallied on Wednesday following a larger than expected fall in the weekly inventory data. US crude oil stockpiles fell by 1.7 million barrels last week against expectations of a 1.4 million barrel decline. The Nymex crude oil contract rose by US$2.01 or 2.2pct US$95.41 a barrel and London Brent crude rose by US$3.26 to US$114.21 a barrel.

Base metal prices were mixed on the London Metal Exchange on Wednesday. Copper fell by 0.7pct after the Fed cut its growth forecast. The late US dollar rally also added to the weakness. However the gold price rallied for a seventh straight session. Comex gold rose by US$7.00 an ounce to US$1,553.40.

Ahead: In Australia, financial accounts and demographic statistics are released. In the US, new home sales data is released.

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