The local share market has fallen to a one-week low after a hawkish speech by the new Reserve Bank governor, as well as signs overseas interest rates might have to stay higher for longer.
The benchmark S&P/ASX200 index on Thursday finished down 44.2 points, or 0.62 per cent, to 7,029.2, while the All Ordinaries dropped 43.6 points, or 0.6 per cent, to 7,234.2.
Reserve Bank governor Michele Bullock told a gathering of economists in Sydney on Wednesday night the remaining inflation challenge for Australia was "increasingly homegrown and demand driven", rather than stemming from global supply disruptions.
The right response to demand-driven inflation was a "more substantial monetary policy tightening", she said, acknowledging such a message would not resonate with some people.
"I think it was hawkish, definitely," JBWere chief investment officer Sally Auld told the NAB Morning Call podcast about Ms Bullock's remarks.
It doesn't sound like the RBA believed it had finished the job, Ms Auld said, adding an outside observer listening to the speech would "think there was probably at least one if not two more rate rises coming down the pipe".
In the United States, an expected drop in initial jobless claims and a rise in short-term inflation expectations ran contrary to growing sentiment the Fed might cut interest rates early next year.
Eight of the 11 sectors of the ASX finished lower, with materials and energy the biggest losers, both dropping 1.4 per cent.
Fortescue fell 1.9 per cent to $24.95, BHP retreated 1.4 per cent to $47.15 and Rio Tinto dipped 1.0 per cent to $126.50.
Pilbara gained 2.3 per cent to $3.62 as chairman Anthony Kiernan highlighted his enthusiasm for the lithium miner's future at its annual general meeting in Perth.
Origin Energy fell 1.1 per cent to $8.33 after the energy retailer postponed Thursday's meeting where shareholders were set to vote on its $16 billion acquisition by a Brookfield-led private equity consortium.
Another meeting will be held on December 4, giving Origin's board the time to consider a last-minute alternative proposal put forward by the consortium that only requires a simple majority for approval rather than a super majority.
A Brookfield spokesperson said an alternative proposal was another way for investors to realise compelling value for their shares, while the retailer's biggest shareholder, AustralianSuper, rejected it as a "low-ball offer" far beneath its estimate of Origin's long-term value.
The Big Four banks were mixed, with CBA down 0.8 per cent to $102.96, ANZ dipping 0.1 per cent to $24.31, NAB flat at $27.99 and Westpac adding 0.4 per cent to $21.31.
AMP gained 5.9 per cent to 90c after the financial services company agreed to a $100 million settlement in a class action lawsuit brought by some of its financials advisers.
AMP made no admission of liability in the settlement, which chief executive Alexis George said was an important step forward for AMP as it allowed the company to put the legacy matter behind it.
Nick Scali dropped 6.7 per cent to $10.84 after the furniture retailer's managing director and chief executive Anthony Scali sold down $50 million in shares, taking his holding to 7.95 per cent of the company his father started.
Appen sunk 30.6 per cent to an eight-year low of 60c after the struggling AI company completed its second capital raising of the year, at a deep discount.
The Australian dollar was buying 65.55 US cents, from 65.30 US cents at Wednesday's ASX close.
ON THE ASX:
* The benchmark S&P/ASX200 index on Thursday finished 44.2 points lower at 7,029.2, a drop of 0.62 per cent.
* The broader All Ordinaries closed down 43.6 points, or 0.6 per cent, at 7,234.2.
CURRENCY SNAPSHOT:
One Australian dollar buys:
* 65.55 US cents, from 65.30 US cents at Wednesday's ASX close
* 97.78 Japanese yen, from 97.28 Japanese yen
* 60.09 Euro cents, from 59.94 Euro cents
* 52.43 British pence, from 52.18 pence
* 108.31 NZ cents, from 108.41 NZ cents.
