The local bourse has fallen sharply after the Reserve Bank surprised markets with another interest rate hike.
The S&P/ASX200 Index on Tuesday fell 86.7 points, or 1.2 per cent, to 7,129.6, while the broader All Ordinaries dropped 81.3 points, or 1.1 per cent, to 7,319.9.
Of 30 economists polled by Bloomberg, 20 had expected the RBA to keep rates on hold, something also anticipated by the futures market.
But the central bank opted to raise the cash rate to 4.1 per cent.
"Today's RBA rate hike is another RBA hammer hit to the ASX200," wrote IG markets analyst Tony Sycamore in a note.
CommSec chief economist Craig James attributed the RBA's decision to the Fair Work Commission ruling last week to raise award pay rates by a higher-than-expected 5.75 per cent.
"The clear risk is that the RBA delivers another rate hike over coming months, but we will wait until after the governor’s speech tomorrow and the national accounts before publishing our updated RBA profile," Mr James wrote.
Even before the central bank's decision the ASX200 had been down around 0.5 per cent following a weak overnight lead from Wall Street.
The S&P500 fell 0.2 per cent and the Dow dropped 0.6 per cent after a monthly business survey known as the ISM Services PMI came in well under expectations, with new orders falling sharply and a contraction in employment.
Ten of the ASX's 11 official sectors finished lower on Tuesday, with utilities the only gainer.
Shares in the interest-rate-sensitive consumer discretionary sector were the biggest losers, collectively falling 2.2 per cent on expectations that higher mortgage payments will mean less discretionary spending.
Wesfarmers fell 2.1 per cent, Aristocrat Leisure dropped 2.5 per cent, and Harvey Norman retreated 3.2 per cent.
All the Big Four banks were lower, with ANZ dropping 1.6 per cent to $22.74, NAB down 1.1 per cent to $25.76, Westpac closing down 2.1 per cent to $20.34 and CBA down 1.0 per cent to $96.56.
In the heavyweight mining sector, BHP fell 0.9 per cent to $43.60 and Rio Tinto dipped 0.2 to $111.33 per cent.
Back in the consumer discretionary space, Baby Bunting plunged 16.9 per cent to a five-year low of $1.48 after the baby goods retailer warned that its big "Storktake" promotional event had flopped, with sales "unprecedentedly low".
If the trend continues, full-year same-store sales will be down by four to five per cent, and company profit could be about $8 million below guidance.
In health care, EBOS Group fell 12.3 per cent to $33.21 and Sigma Healthcare soared 22.81 per cent to 77.5c after Sigma beat EBOS for a billion-dollar contract from Chemist Warehouse.
Australia's largest pharmacy retailer will switch from using EBOS to Sigma as a pharmaceutical drug supplier when its current contract with EBOS expires in a little over a year.
The Australian dollar was buying 66.65 US cents, from 66.06 US cents at Monday's ASX close.
ON THE ASX:
* The benchmark S&P/ASX200 index finished Tuesday down 86.7 points, or 1.2 per cent, at 7,129.6.
* The broader All Ordinaries fell 81.3 points, or 1.1 per cent, to 7,319.9.
CURRENCY SNAPSHOT:
One Australian dollar buys:
* 66.10 US cents, from 66.06 US cents at Monday's ASX close
* 92.73 Japanese yen, from 92.58 Japanese yen
* 62.23 Euro cents, from 61.75 Euro cents
* 53.60 British pence, from 53.15 British pence
* 109.45 NZ cents, from 108.95 NZ cents
