News: XIJ Australia shares pull back from record closing highs as inflation worries drag

• Aussie tech stocks track U.S. peers, hit 2-month low
• Consumer staples up 0.2%, sole gainer on index
• NZ stocks decline for fifth straight session

(Updates to close)

Tech stocks dragged Australian shares lower on Tuesday, in line with broader Asian markets, as investors worried that rising commodity prices could stoke inflation and lead to a sooner-than-expected interest rate hike by the U.S. Federal Reserve.

The S&P/ASX 200 index (xjo) slipped about 1.1% to close at 7,097, pulling back from a record closing high hit on Monday.

Overnight, U.S. stocks fell off record highs, with high-flying technology stocks taking a beating, as inflation data due on Wednesday and appearances by Federal Reserve members later on Tuesday kept investors on edge.

Local tech stocks .AXIJ slumped as much as 4.5%. Buy-now-pay-later firms were among the biggest losers, with index heavyweight Afterpay (APT) sinking about 9.5% to a seven-month low.

"There's a real concern, especially with a lot of Fed speakers coming out this week, that inflationary chat will come through, which could lead to increased expectations of a rate hike," said Nick Twidale, chief executive officer of APAC, FP Markets.

"It's a combination of that and a bit of profit-taking. So, I don't think investors will be too concerned to see this little bit of a natural correction in the market. If it continues on for two or three more days, then we'll start to get a little bit more worried."

Investors now await the country's federal budget due later in the day that is expected to embrace billions in new spending to secure a recovery from the pandemic.

Miners .AXMM slumped 1.3% with BHP Group (BHP) and Rio Tinto (RIO) retreating from record highs scaled on Monday to end 0.7% and 1.75% lower, respectively.

Consumer staple stocks .AXSJ , which are considered defensive and usually outperform tech stocks when borrowing costs rise, were the sole gainers on the index, finishing about 0.2% higher.

New Zealand's benchmark S&P/NZX 50 index (nz50) extended losses into the fifth session, ending 0.2% lower.