At closing bell, the benchmark S&P/ASX200 declined by 62.15 points, or 0.88%, to 6,982.72. The broader All Ordinaries fell 72.11 points, or 0.99%, to 7,209.03.
Australia market met with selling from the outset on tracking an overnight slump on Wall Street and extended its losses, dragged down by concerns that the Fed may start reducing its massive bond purchases, which have boosted stock markets so far. The U.S. consumer price index released overnight unexpectedly rose 0.8% in April after rising by 0.6% in March, and by 4.2% year-on-year, the fastest pace since 2008.
The market had expected the discussion of stimulus tapering to start around the October-December period and the actual reduction to begin next year, but it started to think of the schedule being brought forward.
The Fed has said the current pace of asset purchases will continue until it sees "substantial further progress" toward its policy goals of maximum employment and price stability. It also signaled in March that its benchmark interest rate will remain near zero through the end of 2023.
The RBA has said it aims to keep rates at a record low 0.1% until at least 2024, though its resolve could be tested by a rapidly improving economy.
Technology stocks were the hardest hit today, on tracking a tech sell-off in U.S. peers. Afterpay lost 5.4% to close at A$84.40 and Xero dropped 13% to A$117.39.
Banks Westpac and NAB were trading ex-dividend, dragging the financial sector down, while miners BHP, Rio Tinto and Fortescue Metals slipped as iron ore futures retreated.
CURRENCY NEWS: The U.S. dollar rose to trade at 90.277, up from levels near and above 91.00 in the previous week. The Australian dollar rose against the dollar to $0.7814.
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