Australian shares fall as commodity rally loses steam

Australian shares fell on Wednesday as a drop in gold and iron ore prices pressured commodity-related stocks after a stellar two-session rally on economic recovery optimism. The S&P/ASX 200 index fell 0.5% to 6,806.4 by 0035 GMT, after closing 0.9% higher on Tuesday.

Miners declined 1.6% to dominate losses on the benchmark index, weighed down by a drop in Chinese iron ore futures after top steel-producing city Tangshan issued a second-level pollution alert forcing mills to curb production.

Global miner Rio Tinto fell 1.9%, while rival BHP Ltd shed up to 2.6%. Gold stocks slipped 2.5% in their biggest intraday percentage drop in nearly a week, as a firmer US dollar dented the metal's appeal.

Newcrest Mining, Australia's largest listed gold miner, lost 1.7%, while Northern Star Resources slid 3.1%.

Heavyweight financial stocks were down 0.4%, with three of the "Big Four" banks trading in negative territory.

Technology stocks tracked their U.S peers lower, with buy-now-pay-later giant Afterpay shedding as much as 3.6% to hit a more than three-week low ahead of its half-year results due on Thursday.

Woolworths Group jumped to a one-week high before paring some of the gains. The country's largest supermarket chain warned of slowing sales growth ahead after a pandemic-driven surge in demand helped it post a jump in first-half profit.

Energy stocks rose marginally, but gains were limited by fuel supplier Viva Energy Group, which fell as much as 2.1% after reporting a full-year loss compared to a profit in the previous year.

New Zealand's benchmark S&P/NZX 50 index was down 0.2% to 12,364.59 by 0035 GMT. Construction firm Fletcher Building was among the biggest losers on the benchmark.

New Zealand's central bank is expected to leave interest rates unchanged at a historic low of 0.25% at its first monetary policy decision of 2021 later in the day, according to a Reuters poll.