The share market has posted a significant fall as investors took profits and consider the possibility of the United States reducing its economic stimulus program soon.
OptionsXpress market analyst Ben Le Brun said profit taking in the financial sector was weighing on the wider market.
“Investors are more than likely crystallising some reasonably good returns that have been on offer in this market since about July,” he said.
“It seems as if it had had a bit of a flow through to other sectors of the market.”
The prospect of earlier than expected tapering of the economic stimulus program in the US was also a factor, Mr Le Brun said.
US Federal Reserve members have suggested the Federal Reserve could start tapering its economic stimulus measures in December.
Mr Le Brun said all eyes would be on Fed chairman Ben Bernanke when he speaks to the US Congress at the end of the week.
The Australian market has been weighed down by a fall in bank stocks over the last few days.
Three of the big four banks paid dividends last week, which normally prompts a fall in their share price.
On Wednesday Westpac fell 58 cents to $32.27, ANZ was off 67 cents to $31.44, National Australia Bank dropped 85 cents to $33.65 and Commonwealth Bank retreated $1.78 to $76.31.
Among the miners, BHP Billiton was 40 cents lower at $37.63 and Rio Tinto eased seven cents to $64.63.
Fortescue Metals gained 16 cents to $5.77 as it moved to further reduce its debt.
Several other stocks also made good gains.
Home building products maker CSR climbed 20 cents to $2.61 after its half year profit more than doubled.
Warrnambool Cheese and Butter gained 56 cents, or 6.56 per cent, to $9.10, after one of its three suitors, Murray Goulburn, increased its takeover offer to $505 million.
Department store operator Myer added three cents to $2.72 after a slight rise in quarterly sales, and optimism from chief executive Bernie Brookes about an improved Christmas period.
KEY FACTS
* At the close on Wednesday, the benchmark S&P/ASX200 index was down 73.9 points, or 1.37 per cent, at 5,319.2 points.
* The broader All Ordinaries index was down 69.3 points, or 1.29 per cent, at 5,317.5 points.
* The December share price index futures contract was 77 points lower at 5,334 points, with 34,063 contracts traded.
* National turnover was 1.92 billion securities worth $4.18 billion.
