Australian shares fell for a fifth straight session on Wednesday amid continued worries around a possible 'Brexit', falling commodity prices and ahead of the US Federal Reserve decision on interest rates.
The S&P/ASX200 index slid 1.1 per cent to 5147.1, its lowest close in nearly two months, while the broader All Ordinaries ended 1 per cent lower to 5230.4.
The benchmark index has now dropped about 4 per cent from late May's highs of 5400, due largely to concerns markets could be hit hard should Britons choose to leave the European Union in next week's landmark vote.Credit:Bloomberg
The benchmark index has now dropped about 4 per cent from late May's highs of 5400, due largely to concerns markets could be hit hard should Britons choose to leave the European Union in next week's landmark vote.
"It's not much different to what we saw on Tuesday but the scale of the decline is more modest," said Commsec market analyst Tom Piotrowski.
The S&P;/ASX200 index slid 1.1 per cent to 5147.1.
"Sellers managed to get most of the bloodletting out of the system on Tuesday although when you look around the region we're one of the few decliners today."
Most other regional markets recovered from Tuesday's losses, with Japan's Nikkei ending 0.4 per cent higher and the Hang Seng in Hong Kong up 0.25 per cent.
China's stocks jumped the most in two weeks, reversing an earlier loss after MSCI refused to add the nation's domestic equities to benchmark indexes. The Shanghai Composite was up 1.5 per cent in afternoon trade, after earlier falling 1.1 per cent, spurring talk that state-backed funds may be supporting the market
EasyMarkets Chief Market Strategist Tony Darvall said the risk of Brexit was "the largest macro-economic risk to the markets this year".
With regards to the overnight US Federal Reserve meeting, Mr Darvell said that "no rate hike is expected".
"Instead traders will be focused on the economic projections and chair (Janet) Yellen's press conference at 4.30am (AEST) for clues as to the Fed's interest rate path this year."
Among the blue-chip miners, BHP Billiton fell 2.1 per cent to $17.82 while Rio Tinto shed 1.2 per cent to $42.96.
The banks fell again: Westpac Banking Corporation by 2.3 per cent to $28.55, National Australia Bank 1.9 per cent to $24.98, Commonwealth Bank 1.8 per cent to $72.20 and ANZ Banking Group 1.8 per cent to $23.22.
Fellow blue-chip Telstra declined 1.3 per cent to $5.28.
Shares in dairy producer A2 Milk gained 13.6 per cent to $1.71 after it lifted its full-year profit guidance due to continued demand in China.
A2 Milk also said it is well placed to respond to any further regulatory change in China governing the supply of infant formula.
The company lifted its profit guidance to $NZ350 million to $NZ360 million - up from the $NZ335 million to $350 million it forecast in February.
A2 Milk's improvement helped organic infant formula and baby food producer Bellamy's lift 3.5 per cent to $10.87.
In other corporate news, Virgin said it will raise $852 million and slash costs as part of a new plan to improve its capital position.
Virgin said that the equity raising will be supported by shareholders Singapore Airlines, Nanshan Group, HNA and Richard Branson's Virgin Group, although shareholder Etihad Airways will not take up its rights under the offer.
The equity raising will be priced at 21 cents a share. Virgin shares slumped 11.8 per cent on Wednesday to 26 cents.
The announcement comes just weeks after Virgin raised $159 million by selling a 19.9 per cent stake in the business private Chinese airline operator HNA Group.
Last week another Chinese conglomerate, Nanshan Group, purchased Air New Zealand's 19.9 per cent stake in Virgin.
Mesoblast clawed back some of Tuesday's 42 per cent cratering after Israeli drug giant Teva Pharmaceutical Industries walked away from funding Mesoblast's clinical trials.
Mesoblast finished 12.1 per cent higher at $1.24.
However, investors and analysts are wondering whether Teva could walk away from the Australian biotech altogether.
Teva has a 16.5 per cent stake in Mesoblast, inherited via its acquisition of Cephalon in 2011. The stake is worth about $60 million following Mesoblast's steep fall on Tuesday.
"Given that Teva essentially just ascribed zero value to MSB's most promising product candidate, we see real risk it now also looks to exit its equity stake," Macquarie analysts told clients.