Investors lost more than one per cent on the Australian share market as many worried about early US Senate election results in Georgia, which could give president-elect Joe Biden support for his full progressive agenda.
The S&P/ASX200 benchmark index closed lower by 74.8 points, or 1.12 per cent, to 6607.1 on Wednesday.
The All Ordinaries was down 74.3 points, or 1.07 per cent, at 6881.4.
The ASX bucked a positive lead from Wall Street and followed US futures lower.
The move came soon before early US Senate voting results showed the Democrats ahead for the two seats.
If the Democrats win both, they should control the Senate.
This would give Mr Biden power to implement his full suite of policies.
While investors like Mr Biden’s promise of economic stimulus, they are concerned tax reform and business regulation will affect financial returns.
Investsmart market strategist Evan Lucas agreed ASX investors were worried about Mr Biden gaining more power.
“There was always a belief in the market that a blue (Democrats) wave would possibly be a bad thing,” he said.
“Some policies Biden ran on were slightly against full, free-flowing market movements.”
This fear contributed to ASX investors siding with US futures, rather than Wall Street’s lead.
“There is no doubt that when US futures fell out of bed, we fell out of bed with it,” Mr Lucas said.
Most ASX sectors closed lower. Information technology plunged 3.54 per cent, and healthcare lost 2.32 per cent.
Afterpay lost 4.49 per cent to $113.56, while health giant CSL shed 2.53 per cent to $278.38.
A rare bright spot was the energy sector, which rose 1.61 per cent.
Oil prices climbed nearly five per cent overnight after Saudi Arabia said it will make oil output cuts of 1 million barrels per day in February and March.
The decision followed talks between the Organisation of the Petroleum Exporting Countries.
Saudi Arabia’s cuts are aimed at persuading most producers to hold output steady amid concerns that more coronavirus lockdowns will lower demand.
The oil price rise helped companies like Oil Search. It rose 5.71 per cent to $3.89.
Worley climbed 3.56 per cent to $12.21.
Domestically, Australia will distribute a coronavirus vaccine in early March, rather than late March as previously scheduled.
The Morrison government said it would conditionally approve the Pfizer vaccine and begin vaccination efforts earlier following talks with regulators.
In daily infection figures, NSW reported four and Victoria reported three. Each state had one case not linked to clusters.
On the ASX, furniture retailer Nick Scali continued thriving after on Tuesday saying first-half underlying net profit is expected to be 100 per cent more to $40.5 million, compared to the same period in 2019.
Shares closed up 6.18 per cent to $11.16.
Insurance Australia Group (IAG) said it set catastrophe reinsurance for this calendar year to the same level as 2020, up to $10 billion.
The company said there was a modest increase in reinsurance charges, but these were anticipated.
Shares were up 1.08 per cent to $4.70.
In mining, Fortescue hit a record price for a third consecutive day, $25.79. Shares closed lower by 0.56 per cent to $25.05.
BHP dipped 0.2 per cent to $44.21 and Rio Tinto lost 1.73 per cent to $115.75.
In banking, NAB fared worst of the big four. It shed 1.23 per cent to $22.41.
Vote counting for the US Senate races in Georgia is likely to stop overnight and resume in the morning.
The Aussie dollar was buying 77.80 US cents at 1721 AEDT, higher from 77.08 US cents at the close of trade on Tuesday.
ON THE ASX
* The S&P/ASX200 benchmark index closed lower by 74.8 points, or 1.12 per cent, to 6607.1 on Wednesday.
* The All Ordinaries was down 74.3 points, or 1.07 per cent, at 6881.4.
* At 1721 AEDT, the SPI200 futures was up three points, or 0.05 per cent, to 6547 points.
One Australian dollar buys:
* 77.80 US cents, from 77.08 cents on Tuesday
* 79.94 Japanese yen, from 79.30 yen
* 63.24 Euro cents, from 62.80 cents
* 57.11 British pence, from 56.67 pence
* 107.00 NZ cents, from 106.84 cents.