ASX 200 sheds 52 points at closing; Australia shares end lower as inflation woes dent global equities

Australian shares fell on Wednesday, dragged down by financials and miners, as global investors fretted over whether a potential spike in U.S. inflation could force the Federal Reserve to raise rates earlier than planned.

The S&P/ASX 200 index dropped 0.7 per cent to 7,044.9, settling lower for the second straight session.

Investors remained on edge ahead of U.S. inflation data due later in the day, as rising commodity prices boosted inflation expectations and lifted U.S. Treasury yields while hurting growth stocks, leading to a drop in global equities.

Australia's finance stocks ended lower despite a 0.7 per cent gain in Commonwealth Bank, while energy stocks were the biggest percentage losers, closing 0.7 per cent lower.

Top miners BHP Group and Rio Tinto lost 0.8 per cent and 0.4 per cent, respectively. China's Dalian Commodity Exchange proposed certain changes in its flagship futures that could result in tempering of prices, a potential blow to Australian miners which are a major producer of high quality iron ore.

Travel and tourism stocks fell after the government said international travel was not expected to resume before mid-2022. Flag carrier Qantas lost 3.9 per cent.

Tech stocks rebounded despite a slump in their U.S. peers overnight. Afterpay jumped as much as 6 per cent, recovering from a more than 8.5 per cent drop in the previous session.

"The last two-three years, buying the dip in growth/tech stocks has been a winning strategy and such that we are getting investors trying to pick the bottom," said Mathan Somasundaram, founder of Deep Data Analytics.

"If the U.S. Fed steps into buy bonds and keep real yields negative tonight, then you might see a short-covering rally in tech. If not, tech will continue to slide."

Australia's federal budget announced late on Tuesday promised billions of dollars of new spending, and was largely in line with expectations.

New Zealand's benchmark S&P/NZX 50 index slipped 0.6 per cent to close at 12,564.2.