A sell-off from the major banks and weaker gold prices hit the Australian sharemarket on Wednesday.
The benchmark ASX 200 dropped 56 points, or 0.64 per cent, to 8727.90, while the broader All Ordinaries lost 52 points, or 0.59 per cent, to 8869.00.
Australia’s dollar appreciated against the greenback to buy 70 US cents.
On a mixed day of trading, six of the 11 sectors finished higher, but falls in the index heavy financials and materials hurt the local market.
Leading the declines were the big four banks as Commonwealth Bank slumped 2.16 per cent to $151.17, National Australia Bank dropped 1.78 per cent to $38.55, Westpac fell 1.34 per cent to $34.69 and ANZ slipped 0.23 per cent to $38.30.
Global X etfs investment strategist Justin Lin said the major banks were following a weak lead-in from Wall Street.
“Financials are weighing heavily on the ASX today as the worst-performing sector, likely reflecting a flow-on effect from mixed US bank earnings overnight, alongside renewed inflation and rate hike concerns as elevated oil prices continue to cloud the monetary policy outlook,” he said.
Mr Lin said the latest results from the US banking results were particularly telling.
“The broader takeaway appears to be that, while banking fundamentals remain relatively resilient, higher rates and persistent inflation are beginning to create more visible headwinds for earnings growth,” he said.
“This uncertainty appears to be spilling over into Australian financials, which are also contending with the prospect of higher-for-longer interest rates.”
Also hitting the ASX 200 was falls from the major miners with BHP down 0.69 per cent to $60.86, Rio Tinto slipped 0.32 per cent to $160.48 and Fortescue traded flat at $15.32.
Gold miners continued their decline over US interest rate fears as Evolution mining slumped 3.16 per cent to $12.55, Newmont dropped 1.95 per cent to $164.56 and Northern Star Resources slipped 0.28 per cent to $24.91.
Bullion traded near $US4155 ($A5934) an ounce, following a brief two day sell-off.
Offsetting the falls were gains in the telecommunications sector as Telstra rebounded 1.29 per cent to $4.70 snapping a brief two day losing streak, while Superloop jumped 5.44 per cent to $2.52 and Tuas added 3.18 per cent to $1.62.
Asian stocks rebounded from Tuesday’s chip-led sell-off, largely due to the comments out of the New York Fed President John Williams. Following his announcements, traders expected just one more interest rate hike in the US this year, which led to bond yields falling.
In company news, shares in Glencore traded flat on its first day of trading.
Glencore was already listed on the London and Johannesburg exchanges, but joined the Australian markets on Wednesday.
Defence ship builder Austal soared 10.13 per cent to $4.13 after telling shareholders it had two bidders for the company.
Austal said it had extended time for Hanwha to complete its due while also restating it has a rival bid from Wildcat Infrastructure.
Domino’s Australia shares lost 2.01 per cent to $21.46 after the US boss signalling he is open to taking away some overseas markets from the ASX-listed business.