Australian shares reversed course after reaching mid-August highs on Wednesday, as losses in the technology and healthcare sectors were too heavy to be offset by energy and mining stocks.
The S&P/ASX 200 index lost 0.32% to 7,565.8 by the close of trade, having firmed 0.4% earlier to hit its highest in nearly five months.
The tech sector lost 2.9% in its worst session in over two weeks, tracking the tech-heavy Nasdaq index, which lost 1.3% overnight.
Mathan Somasundaram, the chief executive officer of Deep Data Analytics, attributed the Nasdaq's fall to rising bond yields ahead of the release of minutes of the US Federal Reserve's last policy meeting.
The Fed had said last month it would raise interest rates at least three times in 2022, which could result in capital outflows from high-risk, high-growth sectors such as tech.
Xero Ltd, Afterpay and Wisetech Global led losses in the sector and on the benchmark, recording falls between 2.9% and 4%.
Buy now, pay later leader Afterpay and its smaller rivals Zip Co and Tyro Payments, which fell 5.3% and 6.9% respectively, were also weighed down by brokerage Morgans' forecast of weak earnings for the sector.
Healthcare stocks fell 1.9%, led by a 2.8% drop in hearing device maker Cochlear, while biotech major CSL shed 1.8%.
Meanwhile, mining and energy stocks advanced 0.4% and 0.8%, respectively, on strong iron ore and crude prices.
Oil prices rose overnight after OPEC+, an organisation of oil exporters, stuck to its plans to increase supply in February on forecasting only a mild impact on demand from Omicron, averting any last-minute surprises to the market.
New Zealand's benchmark S&P/NZX 50 index closed it first trading session of the year with a 0.9% rise at 13,150.38, its highest since late October 2021.
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