However, it was the index-heavy iron ore heavyweights BHP (down 0.9 per cent) and Rio Tinto (down 1 per cent) that weighed down the benchmark index most, as the iron ore price again fell below $US100 per tonne. Fortescue also lost 0.7 per cent.

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The technology sector (down 1.4 per cent) was the weakest, with WiseTech losing 1.7 per cent and data centre operator NEXTDC dipping 1.8 per cent.

The lowdown

Capital.com senior financial market analyst Kyle Rodda said the ASX 200 succumbed to the “risk-off sentiment” in global markets.

“Interest-rate sensitive stocks remain the underperformers,” he said. “However, it’s a broad-based [downward] move, with only energy stocks attracting investors due to the elevated geopolitical risk boosting oil prices.”

On Wall Street overnight, US stocks tumbled after a Fed official raised the possibility of delivering none of the interest rate cuts the market is expecting if inflation worsens.

Minneapolis Fed president Neel Kashkari said in an interview with Pensions & Investments that he is now questioning the need to cut rates if so many areas of the US economy look to be solid. He had earlier signalled the likelihood of two rate cuts this year, “but if we continue to see inflation moving sideways, then that would make me question whether we need to do those rate cuts at all”.

Kashkari is not a voting member on the Fed’s policymaking committee, but that does not mean he won’t have a voice at the table.

After the comments, the S&P 500 Index promptly plunged to end the trading session with a loss of 1.2 per cent – its worst performance in seven weeks. Earlier, an intraday gain of almost 1 per cent had pushed the US benchmark to the cusp of its record set last week.

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The Dow Jones Industrial Average fared even worse, ending 1.4 per cent lower after stocks had traded solidly in the green for most of the session. The tech-heavy Nasdaq Composite Index was also down 1.4 per cent.

“The market remains highly sensitive to any indication that the data-dependent Fed may need to curtail a rate easing cycle this year, per Neel Kashkari’s comments this afternoon,” according to LPL Financial’s chief global strategist Quincy Krosby.

US financial markets were already on edge as traders made their final moves ahead of a key American jobs report on Friday that has the potential to move the market.

Market watchers are looking for the jobs market to cool enough to remove upward pressure on inflation, but not so much that it throws too many people out of work and raises the possibility of a recession.

US Treasury yields dropped in the bond market, which can be a signal that some investors are beginning to look for safer harbours, preferring bonds to stocks. The yield on the 10-year Treasury fell to 4.3 per cent, from 4.35 per cent late Wednesday. The two-year yield, which moves more on expectations for the Fed, slumped to 4.64 per cent, from 4.67 per cent.

Tweet of the day

Quote of the day

“There is only so much the sector can do by itself,” said Australian Energy Producers chief Samantha McCulloch after it was revealed East coast gas producers will avoid facing unprecedented orders to break export contracts and redirect supplies to Australian buyers this winter, after the consumer watchdog determined there would be enough gas to meet domestic demand.

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With AP

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