News: XIJ Australian shares mark worst day in 2 weeks as tech stocks weigh

(Updates to close)

Australian shares fell on Friday to their worst day in two weeks, dragged by tech stocks after red-hot U.S. inflation data fuelled bets on more aggressive interest rate hikes by the Federal Reserve and sent Wall Street sharply lower.

The S&P/ASX 200 index (xjo) fell 1% to 7,217.30, snapping a three-day run of gains to mark its worst session since Jan. 27. However, the benchmark gained 1.4% for the week, its second in a row.

Technology stocks .AXIJ slid 3.8% in their worst day in more than a week, with Block Inc's Australian shares (SQ2) down 6.7%, while Xero Ltd (XRO) and WiseTech Global (WTC) dropped 4.5% and 3.4%, respectively.

U.S. stocks closed sharply lower overnight after consumer prices data came in stronger than expected and comments from a Fed official raised fears that the central bank would hike rates aggressively to tame inflation.

Meanwhile, Reserve Bank of Australia (RBA) Governor Philip Lowe said it was plausible interest rates could rise later this year, but there were risks in moving too early.

There are a lot of negatives in the Australian economy right now, including travel restrictions for international passengers and inflation issues, said Brad Smoling, managing director of Smoling Stockbroking.

"It is a smart choice by the RBA not to raise rates until we see just how this plays out," he said.

Financials .AXFJ finished 0.5% weaker, with Commonwealth Bank of Australia (CBA) leading the decline, down 2.2%. Brokerage Citi on Thursday cut its price target for the country's top lender on margin concerns.

However, Insurance Australia Group (IAG) climbed 4.2% on beating first-half profit and dividend estimates.

Miners .AXMM rose 0.5%, hitting a three-week high on strong iron ore prices.

Sector heavyweights Rio Tinto (RIO) , BHP Group (BHP) and Fortescue Metals Group (FMG) gained between 1.2% and 2.9%.

New Zealand's benchmark S&P/NZX 50 index (nz50) dropped 1.9% to 12,173.78 in its sharpest fall since Jan. 28, 2021.

Data showed the country's near-term inflation was expected to rise in the first quarter of 2022.