Australia: Shares set for worst day in nearly five months on recovery concerns

[BENGALURU] Australian shares fell more than 2 per cent on Thursday in their worst session in nearly five months, as investors fled riskier assets following overnight volatility on Wall Street after the US Federal Reserve flagged a potential slowdown in economic recovery.

The S&P/ASX 200 index fell 2.4 per cent to 6,620.40 by 0000 GMT, its worst intraday drop since Sept 9.

Overnight, Wall Street suffered its biggest one-day drop in three months after the Federal Reserve left its key rate near zero and flagged a potential slowdown in the pace of the economic recovery.

US market moves following the Fed holding its rates is a negative catalyst for the Australian markets, said Mathan Somasundaram, chief executive officer at Deep Data Analytics.

"Central banks have lost control, and markets have taken most of the benefit from stimulus than the economy. Governments will be forced to make more socialistic policies to revive the economy, and that will hurt markets ... we are at the start of the pullback cycle."

Miners were the biggest losers by market value, slipping up to 2.6 per cent. Iron ore miner Fortescue Metals Group fell nearly 4 per cent on flat second-quarter iron ore shipments from last year.

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Newcrest Mining lost up to 2 per cent after a drop in its second-quarter gold output.

Financials declined 2.3 per cent, with all the 'Big Four' banks losing between 2 per cent and 3 per cent.

Tech stocks were the top percentage losers, shedding as much as 4 per cent, with Afterpay slipping 5.6 per cent.

In New Zealand, the benchmark S&P/NZX 50 index dropped as much as 2.1 per cent to 13,099.17, its biggest intraday drop since Dec 18. Financials and utilities were the top drags on the benchmark.

The country's financial markets regulator said the stock exchange operator's systems were "insufficient" and failed to meet standards following a probe into multiple outages and cyber attacks that hit the bourse last year.

REUTERS