Big losses for ASX in year's first session

The local share market has made a dismal start to the new year, sinking to a fresh eight-week low amid broad-based selling.

The S&P/ASX200 index on Tuesday closed down 92.5 points, or 1.31 per cent, to 6946.2, while the broader All Ordinaries fell 90.6 points, or 1.25 per cent, to 7131.1.

The ASX200 rose by as 0.4 per cent in the first 10 minutes of trading but sank steadily for the next three hours, recovering modestly in the late afternoon to close below 7000 for the first time since November 10.

IG Markets analyst Hebe Chen told AAP that a number of factors appeared to be weighing on sentiment.

"After quite a turbulent year, we are heading into a new kind of uncertainty or unpredictability about what lies ahead for us," she said.

CoreLogic figures released on Tuesday showed that Australian home prices plummeted another 1.1 per cent in December, and 5.3 per cent over the past 12 months, Ms Chen noted.

There are also worries about China, with COVID cases soaring and figures from a respected private survey firm released on Tuesday indicating that the economy of Australia's biggest trading partner declined significantly in the fourth quarter.

"With the ongoing COVID tidal wave, investment sliding to a 10-quarter low, and new orders continuing to get battered, a meaningful first-quarter recovery is increasingly unrealistic," China Beige Book International said.

Lastly heading into 2023 there are still uncertainty about inflation and when the interest-rate-hiking cycle will end, Ms Chen said.

"So that uncertainty that has been accumulating during 2022 has continued to impact on people's confidence, even though we have started a new page."

Every sector closed lower on Tuesday, with financials the biggest loser, dropping 1.9 per cent as the big retail banks fell to their lowest levels in three months.

ANZ fell 2.8 per cent to $23.01, Westpac dropped 2.7 per cent to $22.73, NAB retreated 2.1 per cent to $29.42 and CBA dropped 1.5 per cent to $101.05. Also, Macquarie was down 1.4 per cent to $164.67.

The heavyweight mining sector was down 0.7 per cent, buoyed by gains for the goldminers, a rare group of companies in the green on Tuesday. Newcrest added one per cent, Northern Star climbed 1.8 per cent and Evolution rose two per cent.

But BHP dropped 0.7 per cent to $45.33, Fortescue Metals fell 0.5 per cent to $20.40 and Rio Tinto retreated 0.8 per cent to $115.43.

Coalminers were hitting their lowest level in weeks, with Whitehaven down 6.3 per cent to $8.83 and New Hope down 8.5 per cent to $5.82.

As one might expect, it was a quiet day for company news, but Weebit Nano rose 7.1 per cent to $3.48 after the next-generation chip company announced it had released to manufacturing demonstration chips featuring its new memory modules.

The Australian dollar was at a two-week high against its US counterpart, buying 67.98 US cents, from 67.76 US cents at Friday's ASX close.

ON THE ASX:

* The benchmark S&P/ASX200 index closed Tuesday down 92.5 points, or 1.31 per cent, to 6946.2.

* The broader All Ordinaries dropped 90.6 points, or 1.25 per cent, to 7131.1.

CURRENCY SNAPSHOT:

One Australian dollar buys:

* 67.98 US cents, from 67.76 US cents at Friday's ASX close

* 88.20 Japanese yen, from 89.83 Japanese yen

* 63.74 Euro cents, from 63.64 Euro cents

* 56.31 British pence, from 56.24 British pence

* 107.43 NZ cents, from 107.12 NZ cents.