The sharemarket ended sharply lower on Thursday, dropping to its lowest since January, as the faltering dollar persuaded overseas investors to continue selling local shares.
The benchmark S&P/ASX 200 Index lost 54 points, or 1.1 per cent, to 4781.2, while the broader All Ordinaries fell 53.4 points, or 1.1 per cent, to 4771.8.
The selloff was broad-based, with all major sectors falling at least 1 per cent.
The dollar continued its downward trend, reaching as low as US94.35¢, its lowest since October 2011, before trading around US94.55¢ in the evening.
"The weakness in the Australian dollar is scaring offshore investors who hold a lot of these high-yield stocks - Telstra, the banks, the real estate investment trusts - and that's where a lot of selling has been concentrated towards," said BBY institutional dealer Anson Rosewall.
Investors took their cues from overnight losses on Wall Street, and were spooked during the session by the wild gyrations of Japan's Nikkei, which ended the day 0.85 per cent lower.
Thursday's loss takes its recent selloff to near 20 per cent, the conventional definition of a bear market.
The ASX 200 has now unwound most of its gains this year. It was about 12.3 per cent higher for the year until May 14, when it hit a high of 5220.987. It has since fallen 8.4 per cent. For the year, the ASX 200 is up 2.8 per cent. Credit Suisse strategist Damien Boey said the underlying focus for investors should be about quality and defensiveness rather than just yield.
"You can have cyclical stocks that offer you a good yield, but they are not necessarily defensive," he said. "So, as I look across the spectrum, there are a lot of defensives that are being sold."
Among the banks, Westpac dipped 1.7 per cent to $27.71, ANZ fell 1.3 per cent to $26.86, NAB lost 0.7 per cent to $28.75 and CBA slipped 0.2 per cent to $66.11.
Telstra also took a drubbing, finishing 1.7 per cent lower at $4.60.
But JBWere executive director Mike Kendall said there was still support for high-yield stocks.
Among miners, Rio Tinto dropped 0.5 per cent to $54.07, while rival BHP was relatively flat, finishing down just 0.1 per cent at $33.77. Iron ore miner Fortescue lost 3.4 per cent to $3.43.
The Goldminer Newcrest was battered, taking a 6.9 per cent hit to finish at $13.36.