US markets took a dive overnight amid concerns a new budget deal in Washington will bring forward the start date for stimulus tapering.
Yesterday, US politicians agreed to set spending levels for the next two years, and ease some of the harsh automatic budget cuts that came into effect earlier this year.
A failure to come up with a budget agreement could have triggered another government shutdown, and the Fed’s concerns about that scenario might have delayed when it began tapering stimulus.
Wall Street suffered its worst performance since early November, with the two of the three benchmark indices sliding over one percent.
The Dow slumped 129 points (-0.8%) to 15844, the S&P500 shed 21 points (-1.1%) to 1782 and the Nasdaq let go of 56 points (-1.4%) to 4004.
Commodities were caught up in the sell-off, with oil mirroring the slide in equities despite data showing a big drop in weekly US crude stockpiles.
Gold retreated from a three week high as the budget deal in Washington reduced uncertainty and diminished the precious metal’s appeal as a safe haven investment.
The US dollar was weaker against most other currencies, whilst the Aussie was hammered on the back of yesterday’s data revealing a big drop in domestic consumer confidence.
In economic news, the Melbourne Institute Inflation Expectations Index is due out at 11:00am, AEDT. That is followed by the all-important Aussie employment figures for November, due for release at 11:30am, AEDT.