The benchmark S&P/ASX200 (^AXJO) pared back losses to close down 0.087 per cent.
The broader All Ordinaries index (^AORD) similarly rebounded, finishing down 0.085 per cent.
What happened this morning?
The benchmark S&P/ASX200 (^AXJO) fell 1.03 per cent at 10.21 AEST, amid early reports the Trump administration was considering sanctions against Chinese officials, businesses and financial institutions.
The broader All Ordinaries index (^AORD) also fell 1.05 per cent.
The drop follows the share market’s 2.93 per cent rally on Tuesday - its best day in seven weeks.
Health stocks on the ASX were the worst hit, spiralling by 3.51 per cent, followed by the materials and information technology sectors which were down 2.53 and 2.13 per cent respectively
One Australian dollar was buying 66.42 US cents at 10.10 AEST, up from 65.91 US cents at the close of trade on Tuesday.
What happened in the US?
US stocks closed higher on optimism about the development of a coronavirus vaccine, but pared gains late in the session after reports emerged of the Trump administration’s sanctions against China.
The reports reinforced White House adviser Larry Kudlow’s comments that Trump was “so miffed with China on virus and other matters that the trade deal is not as important to him as it once was".
The Dow Jones Industrial Average rose 529.95 points, or 2.17 per cent, to 24,995.11, the S&P 500 gained 36.32 points, or 1.23 per cent, to 2,991.77, and the Nasdaq Composite added 15.63 points, or 0.17 per cent, to 9,340.22.
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