MELBOURNE, Australia--Australian shares gave up a large chunk of this week's rally on Thursday after the Federal Reserve said it would raise interest rates.
The Fed's decision was widely anticipated, but it left many skeptical the central bank will move aggressively in the near term given the uncertain outlook for inflation.
A sharp drop in Australian unemployment in May did nothing to halt the equity market's decline.
Ending near its lows of the day, the S&P/ASX 200 dropped 70.7 points, or 1.2%, to 5763.2. That narrowed the holiday-shortened week's gain to 1.5% so far.
Market activity was heavier than usual, with 3.04 billion shares traded worth 12.3 billion Australian dollars (US$9.33 billion), Commonwealth Securities said.
Australia's unemployment rate declined to a lower-than-expected seasonally adjusted 5.5% in May from 5.7% the previous month, and the number of people employed rose by 42,000 against an expected 10,000 rise, the statistics agency said.
The major banks, which carry a heavy weighting in the index, all pulled back from strong gains the past two days. Westpac Banking dropped 2.7%, Australia & New Zealand Banking fell 2.2%, National Australia Bank was 2.1% weaker and Commonwealth Bank of Australia was 0.7% lower.
The large oil-and-gas stocks lost ground as oil prices hovered near seven-month lows on renewed worries about the global supply glut. Woodside Petroleum was down 1.7%, Oil Search lost 2% and Santos dropped 4.7%.
Diversified mining companies BHP Billiton and Rio Tinto fell 2.9% and 4%, respectively, and iron-ore producer Fortescue Metals Group declined 3.3%.
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(END) Dow Jones Newswires
June 15, 2017 03:44 ET (07:44 GMT)