Australian shares fell on Thursday as renewed worries about rising U.S. bond yields soured risk sentiment globally and a slew of local index heavyweights including Rio Tinto traded ex-dividend.
Overnight, major Wall Street indexes closed sharply lower after investors sold high-flying technology stocks, while MSCI's ex-Japan Asian-Pacific shares lost 1.7% in early trade on Thursday.
"The situation in the local market right now is related to the U.S. treasury market," said Brad Smoling, managing director at Smoling Stockbroking.
"This seems to be a big concern and the Fed has to step in to do some yield curve control."
The S&P/ASX 200 index ended 0.8% lower at 6,760.7, weighed down by miners Rio Tinto and BHP Group and supermarket chain Woolworths Group as they traded ex-dividend.
Tech stocks fell 1.5%, tracking a sell-off in U.S. peers. Buy-now-pay-later firm Afterpay slid more than 2%, while Xero Ltd shed 3%.
Healthcare stocks fell 3.5%, hitting their lowest level in nearly a year. Sector heavyweight CSL Ltd, which relies heavily on revenues from the United States, dropped as much as 5.8%.
Bucking broader market weakness, the financial sub-index climbed more than 1% to its highest in over a year. The "Big Four" banks firmed between 0.4% and 2%, while QBE Insurance gained 3%.
Financials have added about 5% this week, buoyed by data showing faster-than-expected economic growth, reaffirmation by the central bank of its accommodative stance and extension of a bond-buying programme.
New Zealand's benchmark S&P/NZX 50 index closed down 1%, with utility, consumer and healthcare stocks weighing the most.
Dairy firm Synlait Milk Ltd dived more than 10% to hit a near four-year low, after withdrawing its 2021 earnings forecast.
(This story corrects additional reporting credit, adds editing credit)
(Reporting by Shruti Sonal in Bengaluru; Additional reporting by Tejaswi Marthi and Subhranshu Sahu)
