News: XEJ Australian shares drop 1% on heavy financials, energy selloff

	  AXJO sub-index hits over one-month low 

	  Gold stocks limit losses in benchmark index 

	  U.S. Fed rate decision due at 1800 GMT 

(Updates to close)

Australian shares on Wednesday marked their worst day in almost seven weeks, as risk-averse sentiment forced investors to sell banking and energy stocks a day after the central bank stunned markets with a surprise quarter-point rate hike.

The S&P/ASX 200 index (xjo) fell 1.0% to 7,197.4 points at the close of trade to hit its lowest level since March 31.

The Reserve Bank of Australia on Tuesday stunned markets by raising its cash rate by 25 basis points when traders had looked for an extended pause, saying inflation was way too high and higher rates might be required.

Investors also keenly awaited the U.S. Federal Reserve's board meeting due later in the day to gauge the future trajectory of monetary policy tightening.

"The selloff started yesterday when the RBA did the surprise 25-point increase and now we're waiting for the U.S., which we anticipate will do the same. So the market is understandably nervous about that," said Brad Smoling, managing director, Smoling Stockbroking.

Back in Sydney, the energy sub-index .AXEJ hit its lowest in more than five weeks after oil prices slumped 5% on U.S. economic concerns.

Sector majors Woodside (WDS) and Santos (STO) closed the day down 2.3% and 2.5%, respectively. Shares of Paladin (PDN) and Beach Energy (BPT) ended lower between 2.4% and 3.5%.

Financials .AXFJ dropped 1.5%, tracking a poor performance from U.S. regional banks on Wall Street.

All "Big Four" banks traded in red, with National Australia Bank (NAB) falling 1.9%.

Local miners .AXMM lost 0.6% during the day, tracking a broader subdued mood in the mining market. Iron ore giants BHP Group (BHP) , Rio Tinto (RIO) and Fortescue Metals (FMG) lost 0.8%, 2.1% and 4.1%, respectively.

Among individual stocks, machine learning solutions company Appen (APX) ended the day 5.7% higher on teaming with NVIDIA NVDA.O for AI solutions.

Investors opted for safe-haven assets among gold stocks, with the sub-index .AXGD limiting losses in the benchmark. The AXGD sub-index ended the day 2.5% higher.

New Zealand's benchmark S&P/NZX 50 index (nz50) fell 1.1% to finish the session at 11,908 points.