Australian shares fell 1.3% on Tuesday to hit an eight-month low as investors exited riskier assets on concerns of a quicker-than-expected rate hike by the US Federal Reserve, with geopolitical tensions and COVID-19 disruptions weighing further.
The S&P/ASX 200 index was down at 7,047.1, as of 2350 GMT, its lowest since May 24, extending losses into a third straight session.
Wall Street recorded a tumultuous session overnight as it closed higher after posting heavy losses earlier as the Fed, which begins its policy meeting later in the day, looks to unwind unprecedented stimulus and open the path for future rate hikes.
In Australia, financials were the top drags on the benchmark as they lost up to 2.1% to their worst level since last April. Top lenders Commonwealth Bank of Australia and National Australia Bank fell 1.3% and 2%, respectively.
The energy sector declined 2.5% to a near two-week low as oil prices fell 2% overnight on a rallying US dollar. Index heavyweights Woodside Petroleum and Santos Ltd dropped 1.8% and 2.1%, respectively.
The Australian mining sector slipped more than 1% in its third straight loss, with global miners BHP Group and Rio Tinto Ltd shedding 1.2% and 1.6%, respectively, as iron ore prices dipped ahead of holidays in China.
Fortescue, the world's fourth-largest iron ore producer, fell 1.2% as the company flagged pressures from strong demand for labour and resources, even as it posted a 2% rise in its second-quarter iron ore shipments.
Meanwhile, Rio reached a deal with the Mongolian government to end a long-running dispute over the $6.925 billion expansion project for the Oyu Tolgoi copper-gold mining project, a positive development just days after its lithium exploration licence in Serbia was revoked.
Across the Tasman Sea, New Zealand's benchmark S&P/NZX 50 index traded marginally higher at 12,202.25, after declining as much as 0.6% earlier in the day.
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