Banks lead $20b sell-off Investors are worried the US central bank will slow the flow of cheap money. Shares dropped to their lowest level in seven weeks, shedding about $20 billion in value, amid growing worries the US Federal Reserve might start reducing its stimulus as early as this month. The benchmark S&P/ASX 200 Index dropped 75.8 points, or 1.4 per cent, to 5198, its lowest level since mid-October. It was the biggest one-day sell-off since August 7. The broader All Ordinaries Index lost 70.6 points, or 1.4 per cent, to 5196.9. The market got off to a slow start after Wall Street chalked up its fourth straight day of losses on the back of improving jobs data, which lifted expectations the US central bank might start to wind back its $US85 billion a month stimulus when it meets mid-December. A profit warning by Qantas contributed to the early gloom. Financial services was the worst performing sector, down 2 per cent as the big banks all fell. Westpac shed 2.7 per cent to $31.49, while Commonwealth Bank lost 1.7 per cent to $75.50. National Australia Bank fell 2.1 per cent to $33.66, and ANZ declined 1.8 per cent to $31.19. Qantas Airways was the worst-performing stock in the top 200, slumping 11.2 per cent to a year low of $1.07 after warning it expects a half-year loss of $300 million announcing it will slash at least 1000 jobs over the next 12 months. The big miners fell despite the combination of a falling dollar and firmer commodity prices as the spot price of iron ore, landed in China, strengthened 1.1 per cent to $US139.70 a tonne. BHP Billiton edged down 2¢ to $36.78, while Rio Tinto lost 0.4 per cent to $66. But the third largest producer Fortescue Metals Group added 1.1 per cent to $5.69. Information technology was the only sector to finish higher, edging up 0.1 per cent as share registry Computershare, which gets a significant translation benefit from a lower dollar, rose 0.2 per cent to $10.76. Credit reporting agency Veda Group made a stellar debut on the exchange, lifting 40 per cent to $1.75, ahead of the biggest float of the year on Friday from Nine Entertainment Co. Wilson HTM Investment Group senior investment manager Peter McManus said the market falls this week were largely attributable to "long-term interest rates rising and putting pressure on high yielding equity markets like Australia." But he also said that institutional investors "are likely to be selling existing profitable holdings in order to participate in new listings." December has traditionally been a reasonably good month for the stock market with or without IPO's, but the market may be a little nervous coming into the end of the week ahead of the release of the US non-farm payrolls data on Friday night, Australian time. A repeat of last month's surprisingly strong result will put tapering firmly on the cards for the December US Federal Reserve Open Market Committee meeting," Mr McManus said. Official data showed Australia's trade deficit widened to $529 million in October, worse than the consensus forecast for a milder decline to a deficit of $350 million. Exports fell 0.1 per cent while imports rose 0.8 per cent. The weak trade data also prompted selling in the currency and at the local close, the dollar was buying US90.43¢ down from US90.67¢ at the previous close. Macquarie Private portfolio manager Brad Partridge said he expects the dollar to continue depreciating "and as such prefers unhedged international equities over Australian equities, while within the local equity portfolio being overweight quality companies which source a material portion of their earnings from offshore." Mr Partridge said "the market has pulled back over the past several weeks, partly due to the many IPOs, which have soaked up some liquidity," but he is tipping for a late Christmas rally and happy new year for shares. Lower interest rates and a weaker currency are likely to be supportive for equities, as we move into 2014.