US Equities Markets
At the close: Dow: 12,598.55 (down 33.45 or 0.3%); S&P 500: 1,324.80 (down 5.86 or 0.4%); NASDAQ: 2,874.04 (down 19.72 or 0.7%).

US equities markets continued to drift lower in Wednesday trading, with all three of the major benchmark indexes booking sub-0.7% interday declines. Greek-related woes that have the potential to spread to other peripheral countries eventually over-powered early buying interest generated by some good US stats. Both the April housing starts and industrial production/capacity utilisation data had many things to like, while the April FOMC minutes included the obligatory promise to do more QE if the economic environment clouded. Only the April building permits numbers fell short of market expectations.

The S&P 500’s interday decline was underwritten by falls in eight of its 10 industrial sectors, with the biggest downshifts seen in Financials (-1.4%), Basic Materials (-1.2%, as most metal prices softened) and Technology (-0.4%). The only two S&P 500 sectors to manage a gain on the day were Consumer Goods (+0.3%) and Health Care (+0.2%). Key disappointments amongst the Dow stock universe were Bank of America Corp, Alcoa Inc, JPMorgan Chase & Co and United Technologies Corp. Department store major JC Penney Co was sold down aggressively after it reported a first quarter loss and sales that fell more than consensus forecasts. On a plus note though, General Electric Co rallied after saying that its finance unit intended to pay a special dividend of US$4.5B to the parent company. Perfume giant Coty Inc has canned its bid for Avon Products Inc and is reportedly now focused on an initial public offering. The company’s valuation is widely expected to exceed US$7B. For its part, Avon will now pursue a turnaround strategy under its new CEO.

US Treasuries
US Treasuries were little changed in Wednesday trading. This despite dovish comments made by several FOMC members in the 24-25 April FOMC meeting minutes. They intimated that additional monetary policy accommodation could be required if the US economy lost momentum (or even ahead of that if downside risks loomed large).

Commodities
Crude oil prices slumped further in Wednesday New York trading as the latest US Energy Department inventories reports revealed a material uplift in stockpiles and Greece-related worries continued to cause disquiet. The West Texas Intermediate benchmark has now retreated back to six-month lows. The DOE report indicated that US oil inventories had jumped by 2.13M barrels in the latest week to 381.6M. Hopes are high that the reversal of the Seaway pipeline on Thursday US time to move crude away from the storage hub at Cushing for the first time may ease pressures here, but others like Citigroup Inc and Barclays Plc are not so sure.

Gold prices are now on the brink of a bear market, going still lower in Wednesday New York trading as Greek-related concerns kept the euro on the back foot. Silver prices fell back towards US$27 an ounce. Base metal prices were also mostly lower, led by 1%+ drops by copper, lead and zinc in Wednesday LME business.

European bourses
European stock markets were mostly lower by the end of Wednesday trading – only the CAC 40 and Swiss Market indexes managed gains (and these were on the small side). The European Central Bank (ECB) announced that it would temporarily stop lending to some Greek banks to limit its risk to these financial institutions - which one would reason is already substantive. This move will effectively push the responsibility for lending to some Greek financial institutions onto the Greek central bank. Draghi acknowledged for the first time that Greece could leave the euro-zone. Market talk has it that Lloyds Banking Group Plc has suspended at least two derivatives traders in a probe of potential interest-rate manipulation in the Libor market. The Stoxx Europe 600 dropped by 0.6% in Wednesday trading, taking its fall over the past four business days to nearly 3%.

Greek Political Impasse Latest: A Greek caretaker government will now set about preparing for new elections, with 17 June firming up as the likely date for the next poll. The latter vote is also looking more and more like a ballot on whether the country should stay in the euro. The head of Greece’s Council of State, its highest administrative court, will be sworn in as head of the caretaker administration, while the formal announcement of the election date will be made after the new parliament is sworn in Thursday and then dissolved. The latest opinion polls are still indicating that the anti-bailout Syriza could come in first at the next election. The general feeling is that Greek voters want to stay in the euro but not endure austerity measures aimed at righting the country’s fiscal ship – something akin to having your moussaka and eating it too! Syriza leader Alexis Tsipras demanded that the caretaker PM freeze the implementation of wage and pension cuts and other austerity measures until fresh elections occurred adding to market nervousness. In amongst all this political uncertainty Greek banks were hammered – the National Bank of Greece SA crashed by 10%+ as deposit outflows occurred.

Currencies
Another day, another sell down in the euro! The European currency dropped in Wednesday New York trading as Greek-related concerns continued to resonate. These fears were added to with news that a caretaker government would be installed in Greece ahead of another general election in mid-June and the European Central Bank indicated that it would temporarily stop lending to some Greek banks. The pound’s recent good run came to an end after the Bank of England conceded that UK GDP growth would remain “subdued” over the near-term (an optimistic prognosis one thinks!) The greenback would have been higher still against other major currencies but for the quite dovish FOMC meeting minutes that issued on the day. The IntercontinentalExchange Inc (ICE) US$ index nevertheless delivered its thirteenth successive interday gain, the index’s longest run of daily increments since its inception in 1973. The A$/US$ rate softened in the wake of the disappointing Westpac-Melbourne Institute consumer sentiment index data released on our Wednesday. The A$ then recovered over the early part of Wednesday New York trading, hitting intraday highs of US$0.9968 as US stock markets found a forward gear. However, in a repeat run of the preceding day this revival was not to last. The Aussie dropped back towards US$0.99 in later business as North American bourses and commodity prices

Economic Releases
April Housing Starts/Building Permits. US housing starts increased to a better than expected 0.717M annualised in April, after an upwardly revised March number of 0.699M (initially 0.654M). The consensus forecast for April was around 0.685M annualised. The single-family houses category rose by 2.3% to a three-month high 0.492M annualised in April. The multifamily homes segment (townhouses, apartments and the like) went 3.2% higher to 0.225M annualised in April. From a geographic angle, only two of four broad US regions managed gains in April – the South advanced by 11.6% and the Midwest by 6.7%. The falls booked in the Northeast and west were 20.7% and 8.1% respectively. On the flip side of the coin, building permits came in lower than expected at 0.715M annualised in April, after an upgraded 0.769M figure in March (initially 0.747M). Economists were forecasting permits of around 0.730M annualised in April.

April industrial Production/Capacity Utilisation. US industrial production increased by a stronger than expected 1.1% in April, its best showing since back in late 2010. However this was helped by material downgrades across the previously released March data – headline industrial production fell by 0.6% in March, well under the initial reading of no change over the month. The manufacturing component rose by 0.6% in April. Around half of the gain seen in headline industrial production over April was due to a 3.9% surge in the autos segment. The utilities segment also made a strong contribution to the solid April numbers, surging by 4.5% over the month, extending its 0.7% advance in March. US capacity utilisation – which measures the percent of total plant currently in action - increased to 79.2% in April – its highest reading since back in  mid-2008 - from 78.4% in March.