Wall Street experienced its first loss-making session this year, over reports of rising US-China tensions.
As the US market retreated from its recent record-highs, Australian shares are headed for a weaker start today.
Market snapshot at 8:30am (AEDT):
- ASX SPI 200 futures -0.3pc at 6,027, ASX 200 (Wednesday's close) -0.6pc at 6,097
- AUD: 78.4 US cents, 58.02 British pence, 65.55 Euro cents, 87.26 Japanese yen, $NZ1.09
- US: Dow Jones -0.1pc at 25,369, S&P 500 -0.1pc at 2,748, Nasdaq -0.1pc at 7,154
- Europe: FTSE +0.2pc at 7,749, DAX -0.8pc at 13,281, Euro Stoxx 50 -0.4pc at 3,608
- Commodities: Brent crude +0.3pc at $US69/barrel, spot gold +0.4pc at $US1,318/ounce, iron ore -0.2pc at $US78.16/tonne
Gold prices jumped to a four-month high as traders ramped up their purchases of the safe haven asset.
In addition, the 10-year US Treasury yield reached as high as 2.59 per cent — its highest level in almost a year.
The US dollar weakened against several currencies, with the Australian dollar rising 0.2 per cent to 78.4 US cents.
However, the local currency might be affected by whether today's official retail sales figures meet expectations.
Reuters-polled economists expecting Australian retail sales (for the month of November) to rise by 0.4 per cent.
What happened on Wall Street?
After a choppy day of trade, the Dow Jones, S&P 500 and Nasdaq ended each of their sessions day 0.1 per cent lower.
On Wall Street, the banking sector surged, led by shares in JPMorgan and Wells Fargo.
But most of the other S&P sectors were sold-off, with the worst performers being the interest-rate sensitive real estate and utilities sectors.
The main reasons for this concern US trade relations with China, Canada and Mexico.
US-China trade tension
US investors were spooked by a Bloomberg report — based off a leak from anonymous Chinese officials — that China may slow down, or even stop, its buying of US government bonds.
The reasons include Chinese officials thinking US debt is becoming less attractive compared to other assets, and trade tensions between the two countries.
China has the world's largest currency reserves, approximately $US3 trillion.
It is also the biggest foreign holder of US government debt, totalling US$1.2 trillion, according to data from the US Treasury Department.
Analysts believe this might be a veiled threat from China to President Donald Trump.
The timing of this comes before his decision to potentially hit Beijing with aggressive trade sanctions this month, as a remedy for America's massive trade deficit with China.
US Treasury undersecretary David Malpass dismissed concerns about China's bond-buying intentions.
"The US Treasury market is a deep, robust market within the world and so we are confident that our economy, with the economy strengthening, that it will remain a deep, robust market," Mr Malpass told reporters.
Canada thinks Trump will pull out of NAFTA
On top of that, Wall Street also fell after Reuters reported that Canada is increasingly convinced Mr Trump will soon announce the US intends to pull out of the North American Free Trade Agreement (NAFTA).
Again, this was a report citing anonymous government sources.
The sources said they expected Mr Trump would make his move at about the same time that negotiators from the US, Canada and Mexico meet in late January — for the sixth and penultimate round of talks to modernise the treaty.