ASX has biggest fall in four weeks

Shares had their biggest fall in more than four weeks as a possible rise in global interest rates moves closer.

The benchmark S&P/ASX200 index dropped 0.37 per cent from Wednesday's record closing high after US Federal Reserve officials brought forward estimates of higher rates to 2023.

Investors rushed to buy the US dollar in expectation of higher rates.

The Australian dollar fell as low as 75.98 US cents and spot gold sunk to depths of $1809.92 an ounce.

Commodity prices were lower. Energy shares lost 1.87 per cent and materials shares dropped 1.8 per cent.

The ASX200 closed lower by 27.2 points, or 0.37 per cent, to 7359.

The All Ordinaries closed down by 32.9 points, or 0.43 per cent, to 7600.5.

Investors debated the consequences of the Federal Reserve's two-day policy meeting.

The central bank projected higher economic growth and inflation as the US economy steadily rises from pandemic lows.

ThinkMarkets analyst Carl Capolingua said share market investors were spooked by the interest rate predictions.

"The Fed let it be known that rates should be higher, sooner," he said.

Yet Mr Capolingua had faith any move to higher rates would be carefully managed.

"You would be silly as an investor to take your money out of the market on the belief these (Fed Reserve) guys are going to screw it up.

"The Fed guys are concerned about how markets will react to anything they do."

He did not expect a big change from Australia's Reserve Bank at its meeting next month.

"We're a long way from an interest rate that could hurt consumer spending and company profits," Mr Capolingua said.

RBC Capital Markets chief US economist Tom Porcelli was more circumspect.

He said Fed Reserve chairman Jerome Powell desperately wanted to move slowly when preparing investors for a rate hike.

"But is he moving slowly now," Mr Porcelli asked.

"Just a few weeks ago he didn't want to 'think about' adjusting policy in any way.

"Now they're talking about tapering (bond-buying) as soon as later this year."

Meanwhile, Australia's unemployment rate dropped to 5.1 per cent in May, returning to pre-pandemic levels.

The drop from 5.5 per cent in April came after 115,200 people joined the workforce.

On the ASX, mining giants continued falling following Wednesday's news of China trying more ways to bring down commodity prices.

China ordered state-owned companies to limit exposure to overseas commodities markets.

Iron ore prices fell. BHP dropped 1.41 per cent to $47.69. Fortescue shed 1.48 per cent to $22.61. Rio Tinto dipped by 1.18 per cent to $124.23.

The climbing US dollar had the opposite effect on gold and its miners.

Northern Star crashed by 7.57 per cent to $10.14. Evolution dropped 4.67 per cent to $4.70. Newcrest lost 2.51 per cent to $26.75.

Seven shares surged after the broadcaster's leaders forecast full-year earnings exceeded analysts' estimates.

Advertisers have responded to better ratings and improving video-on-demand viewership.

Shares were up about 23.75 per cent to 49 cents.

Whitehaven Coal shares crashed by 11.52 per cent to $1.80 after it cut its full-year production estimate.

The company said less coal would be produced from Narrabri in NSW due to engineering works.

Coles dived after revealing it will increase spending to $1.4 billion next financial year.

Company leaders told investors more capital expenditure was needed to help long-term earnings growth.

Shares closed down 4.46 per cent to $16.29.

The Australian dollar was buying 76.12 US cents at 1725 AEST, lower from 76.92 US cents at Wednesday's close.

ON THE ASX

* The ASX200 closed lower by 27.2 points, or 0.37 per cent, to 7359 on Thursday.

* The All Ordinaries closed down by 32.9 points, or 0.43 per cent, to 7600.5.

* At 1725 AEST, the SPI200 futures index was trading higher by two points, or 0.03 per cent, to 7269.

CURRENCY SNAPSHOT

One Australian dollar buys:

* 76.12 US cents, from 76.92 cents on Wednesday

* 84.29 Japanese yen, from 84.65 yen

* 63.70 Euro cents, from 63.49 cents

* 54.47 British pence, from 54.56 pence

* 107.76 NZ cents, from 107.77 cents.