Australian shares have dropped for just the second time in the past 11 sessions following the release of strong jobs data that prompted predictions the country's central bank could again hike interest rates.
The benchmark S&P/ASX200 index on Thursday closed down 19.8 points, or 0.27 per cent, to 7,324.1, while the All Ordinaries finished 18.2 points lower, or 0.24 per cent, to 7,520.7.
Employment rose by 53,000 in March, while the unemployment rate remained steady at a 50-year-low of 3.5 per cent, according to Australian Bureau of Statistics figures released on Thursday.
The better-than-expected data has left the Reserve Bank in a tricky predicament, Saxo market strategist Jessica Amir told AAP.
"They envisaged employment would deteriorate and forecasted unemployment to rise," she said.
"The data today is basically suggesting a small chance the RBA could potentially hike (interest rates) next month so that is why the market has sold off."
Prior to the employment figures, the local bourse had been cautiously trading after the overnight release of inflation data in the United States.
Consumer price rises had slowed in the US but core inflation, which excludes staples such as food and energy, rose to the expected 5.6 per cent.
Wall Street stocks tumbled on the back of US central bank concerns of a "mild recession" following the fall of three regional banks last month.
All but three of ASX's 11 official sectors were down by Thursday's close, led by the consumer staples sector, which declined 1.2 per cent.
Both supermarket giants' share prices ended the day in the red amid fears of a potential rate rise.
Coles Group suffered the biggest loss of 2.5 per cent while cross-town rival Woolworths Group fell 1.1 per cent.
Domino's Pizza wasn't feeling the love, dropping 3.8 per cent to $50.97.
Ms Amir said consumer staples typically do well in a recessionary period.
"On a day where you get validation that inflation is softer than expected (in the US), some people think that a recession might be avoided and that's a catalyst to take profits from those recession stalwarts," she said.
Australia's tech sector, which is closely tied to the US, ended Thursday trading up 1.0 per cent.
The slowing headline inflation data overnight has given the Federal Reserve room to pause rate hikes and potentially cut later this year, Ms Amir said.
"The (tech) market is already pricing in cuts, and that would be theoretically a good catalyst for technology stocks," she said.
The world's largest logistics technology company, Wisetech Global, ended the day trading 1.47 per cent higher.
The energy sector followed closely behind, rising 0.9 per cent on the back of gains by Woodside Energy and Santos, which increased 1 per cent and 0.4 per cent, respectively.
Beach Energy finished flat after trading a quarter of a percentage point lower about lunchtime.
The oil and gas exploration company had announced oil production for the March quarter dropped 5.0 per cent because of a surplus of gas and a planned shutdown of one of its mines.
Corporate Travel Management Limited soared 12 per cent to $21.18 after the business travel company was awarded a $A3 billion, two-year contract by the UK's Home Office.
The banks were mixed at the close with ANZ and NAB gaining 0.7 per cent and 0.1 per cent respectively.
Westpac shares were down 0.1 per cent while CBA shares declined by 1.0 per cent.
The Australian dollar surged to 67.01 US cents on news of the strong employment data, from 66.65 US cents on Wednesday.
Ms Amir has pointed to the Aussie potentially rising above 70 US cents on the back of weaker US inflation and another potential RBA rate rise.
ON THE ASX:
* The benchmark S&P/ASX200 index finished Thursday 19.8 points lower, or 0.27 per cent, at 7,324.1.
* The broader All Ordinaries was down 18.2 points, or 0.24 per cent, to 7,520.7.
CURRENCY SNAPSHOT:
One Australian dollar buys:
* 67.01 US cents, from 66.65 US cents at Wednesday's ASX close
* 89.36 Japanese yen, from 89.00 Japanese yen
* 61.07 Euro cents, from 60.93 Euro cents
* 53.70 British pence, from 53.57 British pence
* 107.85 NZ cents, from 107.54 NZ cents.