[Morningstar with AAP]: Australia's share market had its biggest loss since September, but an investment analyst believed the decline could be good for investors.

The S&P/ASX200 benchmark index closed lower by 130.9 points, or 1.93 per cent, to 6649.7 on Thursday.

The decline was the biggest since a 2.29 per cent loss on September 30.

The All Ordinaries closed down 142.6 points, or 2.02 per cent, at 6917.6.

All sectors but one were lower. Information technology lost the most, 4.76 per cent. Health, while materials and energy shed more than two per cent.

Utilities rose 0.27 per cent.

Earlier, US markets dropped after Federal Reserve chair Jerome Powell said the bank would keep pursuing low interest rates, and acknowledged the economy had faltered.

The bank, after its policy meeting, said hiring and economic growth had slowed, particularly in industries affected by the pandemic.

Investsmart market strategist Evan Lucas said the US central bank's statement was part of the reason for markets' falls, but there was another factor.

He said while many US companies' earnings reports were beating expectations, stock prices were falling.

"It's a healthy thing to see people saying `have we run ahead of ourselves'," Mr Lucas said.

"The prices we've got to go beyond outstanding results. It's so speculative."

He said the same fallout was likely during Australia's earnings season next month.

Mr Lucas cited huge drops for ASX technology companies on Thursday as similar thinking.

Afterpay shed 6.18 per cent to $136.97. Xero lost 6.28 per cent to $132.01. WiseTech Global lost 6.09 per cent to $31.91.

"You would have to suggest these companies are over-priced for where they are at," Mr Lucas said.

There was better news for the Australian economy. Travel restrictions for Sydney residents are set to be wound back, aiding the tourism and travel industries.

Queensland will welcome Sydney residents from Monday, while South Australia will do similarly from Sunday.

Victoria also flagged easing border restrictions for Sydney, with details due on Friday.

On the ASX, Rio Tinto rearranged its management ranks and says it wants to rebuild trust.

Chief executive Jakob Stausholm created a permanent chief executive role for its iron ore business, which chief commercial officer Simon Trott will take.

A chief executive Australia role has been created, and be filled by managing director Pacific operations aluminium Kellie Parker. Other appointments were also made.

Rio was criticised after it blew up sacred Aboriginal caves at Juukan Gorge in Western Australia last year to extract iron ore.

Shares were down 2.86 per cent to $113.70.

Fortescue Metals Group boss Elizabeth Gaines sees no slowdown in demand for iron ore from China, despite stagnant shipments for the second quarter.

The Western Australian company said it shipped 46.4 million tonnes (mt) of iron ore during its December quarter, the same amount as the 2019 period.

Ms Gaines said the figures were consistent with seasonal trends.

Shares closed lower by 4.01 per cent to $22.73.

BHP lost 1.71 per cent to $44.28.

Investors in wealth manager IOOF were unhappy with December quarter figures and sent shares down 10.61 per cent to $3.20.

The company said funds under management slipped $0.4 billion to $202.4 billion.

Customers continued to demand the early release of superannuation, and the company paid $80 million. The early release scheme ended on December 31.

The Commonwealth lost most among the big banks. It slipped 1.69 per cent to $85.14.

On Friday, airline Regional Express will have its annual general meeting.

Healthcare group ResMed will give its December quarter earnings.

The Aussie dollar was buying 76.30 US cents at 1723 AEDT, lower from 77.36 US cents at Wednesday's close.

ON THE ASX

The S&P/ASX200 benchmark index closed lower by 130.9 points, or 1.93 per cent, to 6649.7 on Thursday.

The All Ordinaries closed down 142.6 points, or 2.02 per cent, at 6917.6.

At 1723 AEDT, the SPI200 futures index was lower by 14 points, or 0.21 per cent, at 6576 points.

The NZX 50 Lost -287.54 points (-2.20%) to 13,086.46 while the Nikkei dropped -437.79 points (-1.55%) at the time of writing, to be closed at 28,197.42