Stronger European and US data complemented confirmed Federal Reserve dovishness to drive assets higher in overnight trading. A modest lift in the US dollar saw most commodities retreat from recent highs. There was a distinct contrast between continental and American trading which saw European bonds rallying and US share indices charging to six month highs.

The UK 100 index starred after the Bank of England kept rates on hold and retail sales recorded an unexpected surge in February. The pound gyrated through a one US cent range, pulling back from recent Brexit inspired highs and ten year bonds rallied nine basis points. The strength in bonds spread across Europe, although share investors were less sympathetic and many bourses finished in the red.

The theme continued through the US session. Better than forecast jobless claims and a lift in business and consumer sentiment indices bolstered stocks. The tech heavy Nasdaq led the way, lifting 1.4%. However the support was broad based, with financials the only S&P 500 sector that closed lower.

Japanese inflation data is in focus given recent Yen strength. Forecasts of a core increase of 0.4% in February are in line with January. A higher read would point to a trend higher ion inflation, and likely park significant market reactions. Futures markets are pointing to a 42 point opening gain for the Australia 200 index. Investors may zoom in on retail stocks after Premier Investments this morning unveiled a 13% increase in half year profit.

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