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Wall Street falls as Fed ponders asset sales

07:06 UTC+8 April 6, 2017 | Lucia Stein

Janet Yellen addresses a conference. (Reuters: Gary Cameron, file photo)

Stocks in the United States have closed lower, reversing their gains from a rally earlier in the session, after the release of the minutes from the Federal Reserve's latest meeting.

Markets at 8:00am (AEST):

  • ASX SPI futures -0.3pc to 5843
  • AUD: 75.67 US cents, 60.59 British pence, 83.72 Japanese yen, 70.96 euro cents, $NZ1.09
  • US: S&P 500 -0.3pc to2353, Dow Jones -0.2pc to 20,648, Nasdaq -0.4pc to 5419
  • Europe: Eurostoxx 50 -0.3pc to 3473, FTSE +0.1pc to 7332, DAX -0.5pc to 12218
  • Commodities: Gold -0.1pc $US1,254/ounce, Brent crude -0.4pc to $US53.98/barrel

Most of the Fed's policymakers are considering trimming the central bank's balance sheet later this year if the economy remains strong.

The Federal Reserve owns $4.5 trillion in assets as a result of its huge buy up during the financial crisis, but signals it might be cutting back on buying new bonds caused bond prices to climb and yields to fall.

The timing has caused markets to do "somewhat of a rethink," according to IG chief market strategist Chris Weston.

"[Markets] were likely of the view the process of allowing [the Federal Reserve's] massive $4.5 trillion balance sheet to gradually reduce would materialise in late Q1 [first quarter] 2018 [instead of the latter half of this year]."

The minutes also revealed that officials were divided over how to approach inflation and the economic impact of President Donald Trump's policy agenda.

But Mr Weston said the minutes were not the only factor weighing on investors overnight.

"House speaker Paul Ryan also suggesting the Senate doesn't have a plan on tax reform and that tax reform may take longer than health care reform certainly caused a second leg to the late session sell-off," he wrote.

"Any hope of tax reform materialising in August is actively being priced out of markets here."

The sell-off late in trade reversed an earlier rally, sparked by the release of a solid jobs report in the US.

The national employment report showed US private employers added 263,000 jobs in March, which exceeded economists' expectations and was well above the number hired in February.

In company news, drugstore chain Walgreens fell more than 1 per cent after it reported a surprise drop in quarterly sales.

European shares are flat, still under pressure from weakness in the auto sector.

But analysts say investors remain optimistic after data showed eurozone businesses had their best quarter in six years.

Locally, the market is on track to open lower.

The Australian dollar edged higher this morning and at 8:00am (AEST), it was worth 75.66 US cents.

West Texas crude oil rose to $US51.09 a barrel, a barrel of Tapis was worth $US54.55 and spot gold eased to $US1,254 an ounce.

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