MORNING REPORT
(7am AEST)

U.S. wholesale inventories rose 0.3pct in March to $480.4 billion, while wholesale sales rose 0.5pct to $411.1 billion. The inventories-to-sales ratio was unchanged at 1.17. Inventories of durable goods rose 1pct in March, while inventories of nondurables decreased 0.6pct. In February, total inventories grew 0.9pct, while sales rose 1.1pct.

European shares fell to a fresh four-month low on Wednesday, but managed to par back some losses towards the end of the session. Fears that Greece may leave the euro zone also continued to weigh on sentiment. Spain´s IBEX fell by nearly 3pct and Spanish 10yr bond yields rose over 6pct on uncertainty over its troubled banking system. The benchmark FTSEurofirst 300 index fell by 0.3pct with the UK FTSE down 0.4pct. However the German Dax managed to eke out a gain of 0.5pct.

US sharemarkets fell on Wednesday but recovered off two-month lows on news that Greece will receive its latest bailout payment. Greece will get the total €5.2 billion in emergency aid required to meet debt obligations. Despite the improvement in late trade, eight of the 10 S&P sectors ended lower. At the close of trade, the Dow Jones was lower by 97pts or 0.8pct with the S&P 500 down by 0.7pct while the Nasdaq lost 12pts or 0.4pct.

US treasuries rose (yields lower) on Wednesday as concerns about the political situation in Greece and speculation of a bailout for Spain resulted in a switch to safe-haven US government bonds. US Treasury sold $24 billion in 10-year bonds at a record low auction yield of 1.855pct. US 2yr yields were flat at 0.26pct and US 10yr yields fell by 2pts to 1.82pct.

The Euro fell for the eight consecutive session against the greenback on Wednesday. The main driver was the uncertain political situation in Greece which may undermine austerity plans in the region. The Euro eased from highs around US$1.3000 to lows near US$1.2915 and headed into the US close at US$1.2950. The Aussie dollar fell from highs around US100.90c to US100.15c and ended US trade near US100.60c. And the Japanese yen lifted 79.85 yen per US dollar to JPY79.45 and ended US trade at JPY79.62.

Benchmark crude oil prices were mixed Wednesday. Bargain hunting following the recent sell-off was offset by concerns surrounding global growth. The rise in US weekly oil inventories was a further dampener on buying. US crude oil inventories rose by 3.65 million barrel last week against expectations for a 2 million barrel build. US Nymex crude fell by US20c or 0.2pct to US$96.81 a barrel - the sixth straight session of losses. London Brent crude rose by US47c to US$113.20 a barrel.

Base metal prices were weaker on the London Metals Exchange. Zinc led the declines (down 1.7pct). The weakness was driven by risk aversion following the threat to an escalation in the Euro debt crisis. In addition traders waited on a suite of Chinese economic data - due out on Friday. And the gold price fell in line with other commodities, the June Comex gold futures price lost US$10.30 or 0.6pct to US$1,594.20 an ounce.

Ahead: In Australia, employment data is released. In the US, trade figures are released.