SYDNEY, AAP – Stocks on the Australian market had their second-steepest fall of the year as investors brace for news next week of the path to higher global interest rates.

The market closed lower by 2.27 per cent on Friday and some of the biggest categories such as materials and healthcare were among the chief losers.

The ASX lost almost three per cent this week – its worst performance in 15 months.

IG Markets analyst Kyle Rodda had no doubt the US Federal Reserve meeting next week was on investors’ minds.

“Investors are worried that the central bank is going to flag aggressive rate hikes,” he said.

“(The Fed) may throw the stock market under the bus to stamp out inflation.”

Mr Rodda noted US after-market trade had dived following US Treasury Secretary Janet Yellen’s vow that the government would address higher than expected inflation.

That set up a wretched trading day on the ASX. The market fell early and closed at its lowest level since June last year.

Materials shares lost 3.52 per cent and energy shares plunged three per cent.

There were losses of more than two per cent for shares in consumer discretionaries, healthcare, technology, telecommunications and utilities.

The benchmark S&P/ASX200 index closed down 166.6 points, or 2.27 per cent, to 7175.8 points.

The All Ordinaries index closed lower by 178.8 points, or 2.33 per cent, to 7490.1 points.

Next week, Australian inflation data due Tuesday will give more insight into whether the nation is headed for surging prices. Westpac forecast a 1.1 per cent rise for the December quarter and 3.0 per cent annually.

The Reserve Bank has been unwilling to raise rates before 2024 and has said inflation is not near the levels of the US.

In company news, Qantas will reduce domestic capacity by about 10 per cent after Western Australia postponed reopening indefinitely.

The news came after trading closed. Qantas was down about three per cent to $4.89.

There was plenty of news among big miners.

Serbia revoked Rio Tinto’s lithium exploration licences, bowing to protesters who opposed the project on environmental grounds.

Rio Tinto’s Jadar lithium project is worth about $US2.4 billion.

Shares in the miner were down 4.14 per cent to $108.72.

BHP investors in Australia and the UK have voted for all shares to trade on the ASX.

The UK business makes less than five per cent of its earnings and the company can reduce costs by scrapping shares on the London exchange.

A UK court must approve the scheme on January 25.

BHP was down 4.81 per cent to $45.70.

The other major iron ore miner, Fortescue, shed 2.1 per cent to $20.94.

Whitehaven Coal lowered full-year production and sales forecasts after heavy rain and pandemic worker shortages affected its December quarter.

The company is more than halfway through its fiscal year and said coal production was down about five per cent.

Shares dropped 6.1 per cent to $2.77.

Analytics software vendor Nuix had more misery on the market after revealing another first-half loss is likely.

The forecast after-tax loss was between $2 million and $3.5 million, although this would be better than the previous first-half loss of $16.6 million.

Earnings were also tipped to be higher and sales stable.

Investors sent shares lower by 22.82 per cent to $1.59.

The big banks were all down. ANZ fared worst and dropped 1.64 per cent to $28.11.

The Australian dollar was buying 71.97 US cents at 1725 AEDT, lower from 72.31 US cents at Thursday’s close.

ON THE ASX

* The benchmark S&P/ASX200 index closed down 166.6 points, or 2.27 per cent, to 7175.8 points on Friday.

* The All Ordinaries index closed lower by 178.8 points, or 2.33 per cent, to 7490.1 points.

* At 1725 AEDT, the SPI200 futures index was up 12 points, or 0.17 per cent, at 7067 points.

CURRENCY SNAPSHOT

One Australian dollar buys:

* 71.97 US cents, from 72.31 cents on Thursday

* 81.92 Japanese yen, from 82.77 yen

* 63.54 Euro cents, from 63.70 cents

* 52.95 British pence, from 53.06 pence

* 106.87 NZ cents, from 106.91 cents.