What you need2know:

• SPI futures down 48 pts at 5274

• AUD at 87.32 US cents, 95.25 Japanese yen, 69.22 Euro cents and 53.97 British pence.

• On Wall St, S&P 500 -1.3%, Dow -1.4%, Nasdaq -1.6%

• In Europe, Euro Stoxx 50 -1%, FTSE -1%, CAC -1.2%, DAX -1%

• Iron ore (out of the Qingdao port) was up 1.1% to $US78.89 per metric tonne

• Spot gold up 0.5% to to $US1213.90 an ounce

• Brent oil down 0.5% to $US94.20 per barrel

What’s on today

Australia ABS international trade in goods and services August (market forecast deficit of $725 million), building approvals (forecast rise of 0.5 per cent), tender for the issue of $500 million of Treasury notes maturing on February 27, 2015 is planned; US trade balance for August.

Stocks to watch

A report by Wall Street brokerage Bernstein Research suggesting Rio Tinto is a logical takeover target for Glencore has lingered in people’s minds. Well-placed sources on both sides have suggested Glencore may have called in Standard Chartered Bank earlier this year to begin to assess whether there is merit in the idea.

Morgan Stanley was holding an “overweight” recommendation on BHP Billiton prior to a site visit with a $44 a share price target.

Morningstar has a “hold” recommendation for outdoor retailer, Kathmandu Holdings with a fair value price expectation of $3.00 a share.

Currencies

The latest euro zone data, along with a report on slowing euro zone inflation on Tuesday, underscored the contrasting monetary policy outlooks of the US Federal Reserve and the European Central Bank. The ECB meets on Thursday.

The euro, down 0.2 per cent at $US1.2606, continued to inch lower, but managed to pare declines to climb back above the $US1.26 mark, a level it had held for two years until Tuesday.

Norway will for the first time start buying kroner with foreign currency from its oil revenue accounts as Scandinavia’s richest nation takes an historic step in covering growing budget needs as crude output declines.

Commodities

Copper prices rebounded slightly from 3-1/2 month lows but remained vulnerable to dollar strength, concerns about lacklustre demand from top consumer China and unrest in neighbouring Hong Kong.

Brent oil bounced off a two-year low and headed toward $US96 a barrel and US crude also rose as crude stockpiles fell unexpectedly and Chinese factory data offered signs of hope for the slowing economy. US crude oil inventories fell 1.4 million barrels last week, compared with an expected increase of 700,000 barrels.

China’s State Council just announced that it will implement the long-expected coal resource tax reform from December 1, 2014, changing from volume-based to price-based, and Citi Research says it sees this as neutral to positive to the coal sector.

United States

US stocks dropped more than 1 per cent on Wednesday as the first diagnosis of Ebola in a patient in the United States spooked investors, economic data pointed to uneven growth, and the Russell 2000 index entered correction territory.

The Ebola news pressured shares of airlines and other transportation names, with the NYSE ARCA Airline index falling 3.1 per cent, the biggest percentage decline since January. The Dow Jones transportation average dropped 2.5 per cent, its biggest daily percentage drop since February.

US auto sales in the third quarter were the best in eight years, but mixed September results from leading auto makers indicated the industry’s torrid summer pace is slowing.

The Federal Reserve will begin publishing a new monthly index of US labour market conditions on Monday, October 6, that draws on a range of data to give a better sense of the economy’s health

Europe

European shares finished lower on Wednesday weighed down by disappointing regional manufacturing data and concerns about European earnings after retailer Sainsbury and cable maker Nexans issued sales warnings.

“The prospect of a growth impulse in the euro zone is getting more distant as the economic data for Germany point to low to zero growth,” Ronny Claeys, senior strategist at KBC Asset Management in Brussels, said.

Greek banks featured among the top gainers in Europe, with Piraeus rising 5.2 per cent and Alpha Bank up 3.4 per cent. Sources said Greece had won a concession from the European Central Bank that could help its top four lenders pass the asset quality review.

What happened yesterday

Shares jumped on Wednesday, with the S&P/ASX200 rising 41 points, or 0.8pc, to 5334.1, in a rally led by the big banks as the falling dollar finally sparked a rush of foreign buying.

Investors shrugged off sliding commodity prices and the release of some disappointing domestic retail spending statistics.