MORNING REPORT
(7am AEDT - Due to the change in daylight saving hours in the US - Wall street now closes at 7am AEDT)

In the Euro-zone, the consumer price index was unchanged at a 2.7pct annual rate in February, as expected. In the US, the current account deficit widened by $16.5 billion to US$124.1bn in the December quarter, above expectations near $114.2bn and equivalent to 3.2pct of GDP. In the UK, claimant count unemployment rose by another 7,200 in February. The claimant count rate of unemployment held steady at 5.0pct, while the ILO measure was unchanged at 8.4pct. Average earnings growth remained subdued at just 1.4pct.

European shares rose to fresh 8-month highs on Wednesday with investors encouraged by solid demand at an Italian government bond auction. The benchmark FTSEurofirst 300 index rose by 0.3pct but while the German Dax gained 1.2pct, the UK FTSE lost 0.2pct. Mining stocks weighed on the FTSE with shares in Rio Tinto down 1.5pct and BHP Billiton 2.3pct.

US sharemarkets were mixed on Wednesday following the stellar gains recorded the previous day. Shares in Citigroup fell by 3.5pct. But shares in Apple rose again, lifting 3.7pct in response to positive broker comments. At the close, the Dow Jones was higher by 16pts or 0.1pct with the S&P 500 down by 0.1pct and the Nasdaq rose by less than 1 point.

US treasuries slumped on Wednesday with yields lifting to the highest levels since last October. Investors are shifting from bonds to equities in response to positive economic data, successful bank stress test results, upbeat commentary from the Federal Reserve and increased supply. Treasury sold $13 billion in 30-year bonds on Wednesday. US 2yr yields rose by 4pts to 0.40pct and US 10yr yields rose by 16pts to 2.28pct.

The US dollar continued to make ground against major currencies during European and US trade on Wednesday. The Euro rose from US$1.3030 to around US$1.3090 but then slid to US$1.3010 before edging up to US$1.3025 in late US trade. The Aussie dollar eased from highs around US105.50c to US104.30c and was near US104.50c in late US trade. And the Japanese yen eased from 83.05 yen per US dollar to JPY83.81 and was near JPY83.74 in late US trade.

Benchmark crude oil prices fell in line with other commodities in response to a stronger greenback. A stronger US dollar makes commodities more expensive for buyers in Europe and Asia. Higher weekly US crude inventories also weighed on prices. The US Nymex fell by US$1.28 or 1.2pct to US$105.43 a barrel while London Brent crude fell by US$1.24 to US$124.97 a barrel.

Base metal prices eased on Wednesday, succumbing to a firmer greenback. Metals fell up to 2.4pct but nickel bucked the trend, up 0.6pct. The gold price also slumped, hitting an 8-week low, with the April Comex gold price lower by US$51.30 or 3.0pct to US$1,642.90 an ounce.

Ahead: In Australia, the Reserve Bank Bulletin is released together with car sales and lending finance. Myer releases its half-year result. In the US, producer prices, weekly jobless claims, capital flows and the Philadelphia Fed index are released.