The Australian share market has dropped significantly for a second day, with every sector except energy in the red ahead of two big risk events in the United States.
The benchmark S&P/ASX200 index on Wednesday finished 39.9 points, or 0.51 per cent, lower at 7,715.5, while the broader All Ordinaries dropped 42.8 points, or 0.53 per cent, to 7,963.1.
Wednesday night AEST the US Bureau of Labor Statistics will release last month's consumer price index data, which will be closely watched after the US inflation readout for April came in softer than expected.
"Inflation remains top of mind for market participants," Saxo head of FX strategy Charu Chanana said.
The Federal Reserve wants to see confirmation that disinflation is progressing to give it confidence that it can cut rates this year, Ms Chanana said.
Fed chairman Jerome Powell will have a chance to say that directly hours later, when the latest Federal Open Market Committee meeting wraps up during Australia's pre-dawn hours on Thursday.
The Fed is universally expected to announce it is leaving interest rates unchanged, but its quarterly "dot plot" projections on when interest rate cuts might begin and how many are expected in 2024 will be highly anticipated.
Blerina Uruçi, chief US economist at T. Rowe Price, said the "dot plots" would be a close call for many FOMC participants given the resilience of the US labour market.
"For this reason, I think that risks are skewed in a hawkish direction (i.e the dot plot could have only one cut this year)," Ms Uruçi wrote.
"An upside surprise to the CPI data would further increase the odds of a hawkish surprise."
That would presumably set the stage for a even broader market sell-off. On Tuesday the ASX dropped 1.33 per cent, its worst loss in seven weeks.
On Wednesday, the ASX's utilities sector was the biggest loser, falling 1.1 per cent as APA Group dropped 1.7 per cent.
In the heavyweight materials sector, BHP dropped 0.6 per cent to $43.50, Fortescue slid 1.3 per cent to $23.29 and Rio Tinto fell 1.5 per cent to $121.04.
Adbri finished up 0.3 per cent to $3.19 as shareholders of the cement, concrete and lime manufacturer formerly known as Adelaide Brighton approved its $2.1 billion, $3.20-per-share takeover by Ireland-based building company CRH.
Adbri is set to be delisted from the ASX on Monday after 62 years on the bourse.
In the financial sector, three of the big retail banks finished lower, with CBA dropping 0.7 per cent to $124.10, NAB subtracting 0.4 per cent to $34.74 and ANZ retreating 0.5 per cent to $28.78.
Westpac was the outlier, edging 0.1 per cent higher at $26.71.
The energy sector finished up 1.1 per cent thanks to a broker upgrade for its largest component and as Brent crude rebounded to a two-week high of $US82 on a drop in US inventories.
Woodside rose 2.6 per cent to $27.79 following the upgrade by Macquarie, while Santos and Beach both added 0.3 per cent.
Elsewhere in the sector, uranium producers - who have been standout performers this year - suffered heavy losses as yellowcake prices dropped under $US85 a pound for the first time this year.
Boss Energy retreated 5.2 per cent to a five-month low of $4.04, while Deep Yellow fell 5.6 per cent to a five-week low of $1.44.
The Australian dollar was buying 66.13 US cents, down from 66.08 US cents at Tuesday's ASX close.
ON THE ASX:
* The benchmark S&P/ASX200 index on Wednesday dropped 39.9 points, or 0.51 per cent, to 7,715.5.
* The broader All Ordinaries fell 42.8 points, or 0.53 per cent, to 7,963.1.
CURRENCY SNAPSHOT:
One Australian dollar buys:
* 66.13 US cents, from 66.08 US cents at Tuesday's ASX close
* 104.10 Japanese yen, from 103.79 Japanese yen
* 61.63 Euro cents, from 61.28 euro cents
* 51.95 British pence, from 51.82 pence
* 107.69 NZ cents, from 107.77 NZ cents
