Fed comments & Oil rally trigger afternoon sell off

US markets opened in positive territory before Fed rates commentary and a pop in oil prices spooked traders and triggered an afternoon sell off.

The Dow Jones finished the day down 1.3 per cent, the S&P500 closed down 1.1 per cent after being up close to 1 per cent in early trading and the Nasdaq fell 1.4 per cent for the day.

Turning to US sectors, all sectors finished in the red with Tech and Healthcare the worst performers down 1.7 per cent & 1.4 per cent respectively. The best performing sector was Energy which finished virtually flat down 0.06 per cent for the day.

The sell off was triggered by a combination of rates commentary and a rally in oil. Comments from the Minneapolis Fed President Kashkari that he wondered if the central bank should cut rates at all if inflation remained sticky pushed treasury yields higher.

Adding to market concerns around inflation crude oil prices popped higher in afternoon trading with WTI closing 1.3 per cent higher at $86.59 per barrel and Brent closing 1.45 per cent higher at $90.65 per barrel. Concerns around geopolitical risks in the Middle East again spooked traders after news reports that Israeli embassies have been put on high alert as Iran continues to make noises about retaliation for the Damascus Consulate bombing.

All eyes will now turn to the key March nonfarm payrolls report which is due out tomorrow. Consensus expectations are looking for a 200,000 rise in payrolls. If the number surprises to the upside this may place additional pressure on the Fed and rates.

In other commodity news, copper prices rallied to the highest level in 14 months due to concerns around supply risks. Whilst there are demand concerns related to China's property sector and other key industries, India's massive infrastructure spending and the global AI frenzy are seen as new drivers for demand.

Futures

The SPI futures are pointing to a 0.8 per cent fall.

Currency

One Australian dollar at 7.35am was buying 65.85 US cents.

Commodities

Gold lost 0.20 per cent. Silver fell 0.18 per cent. Copper added 0.49 per cent. Oil gained 1.51 per cent.

Figures around the globe

European markets closed mixed. London’s FTSE gained 0.48 per cent, Frankfurt added 0.19 per cent, and Paris closed 0.02 per cent lower.

Turning to Asian markets, Tokyo’s Nikkei gained 0.81 per cent, Hong Kong’s Hang Seng and China’s Shanghai Composite were closed.

Yesterday, the Australian share market closed 0.45 per cent higher at 7,817.34.

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