Reduced expectations of an interest rate cut and a drop in iron ore prices have pushed the share market to a seven-week low.
The benchmark S&P/ASX200 index fell during the afternoon to a level last seen on March 11, only days after it approached the key 6,000 level.
Australian Stock Report head of research Chris Conway said dividend-driven investors dumped banking and telco shares, as financial markets remained divided on the likelihood of an interest rate cut on Tuesday next week.
“We saw that specifically today with the financials, one of the hardest hit sectors,” he said.
Commonwealth Bank shed $1.70, or 1.88 per cent, to $88.87, ANZ had dropped 76 cents, or 2.19 per cent, to $33.99, Westpac had lost 94 cents, or 2.5 per cent, to $36.46 and National Australia Bank was down 69 cents at $36.77.
The big miners fell, after iron ore prices dropped 4.6 per cent to finish at $US57.13.
BHP Billiton shed seven cents at $31.97, Rio Tinto lost 56 cents to $57.15 and Fortescue Metals had given up 10 cents, or 4.41 per cent, to $2.17.
“Given the weighting of banks and miners in the Australian market, when you get the diabolical situation of both of those sectors being weaker, you end up down significantly on the day,” Mr Conway said.
Telco shares were also much weaker, with market giant Telstra losing nine cents, or 1.42 per cent, to $6.23.
TPG Telecom was down seven cents at $8.94 after iiNet gave it until Tuesday to up its $1.4 billion takeover offer following a $1.6 billion rival bid from M2.
Amcom shares fell 40 cents, or 14.81 per cent, to $2.30 after TPG increased its stake from 6.7 per cent to 18.6 per cent in a bid to frustrate its plans to merge with Vocus, whose shares fell 16 cents, or 2.68 per cent, to $5.81.
Ten Network was flat at 20.5 cents after the TV station announced a $264.4 million net loss for the six months to the end of February, 33 times the size of the $8 million loss a year ago.
The result was better than market expectations.
The Australian market also had a weak lead from Wall Street, after official data showed the US economy grew just 0.2 per cent in the first quarter.
KEY FACTS
* At the close on Thursday, the benchmark S&P/ASX200 index was 48.6 points, or 0.83 per cent, lower at 5,790.0.
* The broader All Ordinaries index was down 44.5 points, or 0.76 per cent, at 5,773.7.
* The June share price index futures contract was 70 points lower at 5,757, with 44,608 contracts traded.
* The price of gold in Sydney at 1700 AEST was $US1,203.30 per fine ounce, up $US2.50 from $US1,200.80 on Wednesday.
* National turnover was 1.6 billion securities worth $5.8 billion.
