The price of iron ore is set to fall at a faster pace due to weakening Chinese demand for Australia's biggest export, causing pain on the local share market.

The benchmark ASX 200 closed 0.7 per cent lower at 7,403, while the broader All Ordinaries dropped 0.7 per cent to 7,702. 

The resources sector was the biggest drag on the market.

It comes as the price of iron ore fell below tumbled below $US110 overnight after hitting a high of $US230 a tonne in May.

Iron ore fell by $US6.90, or 6.1 per cent overnight, to $US106.50 per tonne, according to CBA.

Analysts from UBS have cut their price forecasts for iron ore and now expect the commodity to fall below $US100 a tonne before the end of this year, instead of in 2022.

The pain won't end there — UBS also expects the average price of iron ore to be $US89 a tonne in 2022.

The price hit is linked to China's construction slowdown and energy policies.

"China's steel output cuts look to gather pace later this month or October as a number of provinces fall behind their reduction targets on energy consumption," said Vivek Dhar, CBA commodities analyst.

He said the collapse of Chinese property developer Evergrande would be the worst possible scenario for steel demand.

"For now, market attention is firmly turned to the potential fallout in China's property sector if China Evergrande defaults on its loans due to a slowdown in property sales.

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Local miners fall after iron price drop

Fortescue Metals was the biggest loser on the ASX 200, down 11.4 per cent.

BHP shares fell by 3.6 per cent, after tumbling 3.3 per cent on Wall Street and in London.    

Rio Tinto shares tumbled 4.7 per cent on the ASX, after suffering similar losses on the New York and London stock exchanges.

Other stocks dragging on the market included Iress (-10.5pc); Mineral Resources (-8.5pc); Iluka Resources (-7.6pc); and Whitehaven Coal (-6.4pc).

Industrials, technology, health care, and consumer cyclicals boosted the market. 

The top-performing stocks on the ASX 200 were Redbubble (+6pc); Pointsbet (+5.8pc); Ingenia Communities (+4.7pc), G8 Education (+4.4pc); and Shopping Centres Australasia (+3.6pc).

Qantas boss takes home more pay 

Qantas CEO has Alan Joyce received an extra $250,000 in remuneration last financial year, or 13 per cent compared to the previous year.

That takes Mr Joyce's pay packet to a bit under $2 million, which is down from pre-COVID-19 levels. 

It comes as the airline said on Friday it was considering new ways to structure pay to so it could keep key executives employed. 

The news didn't seem to worry investors, with Qantas shares closing 1.2 per cent higher.

Qantas has shed about 9,500 workers since the start of the coronavirus pandemic and stood down another 8000.

Chairman Richard Goyder said executives had faced a high workload with no annual bonuses for the last two years, and a continued wage freeze at a time when attrition was rising across the airline.

"Our executive cohorts are talented and in increasing demand across a range of industries, many of which, unlike aviation and tourism, are experiencing high rates of growth and activity, with financial rewards to match," he said in the airline's annual report.

Mixed day on Wall Street

More broadly, US investors responded to mixed economic data on retail sales and jobless claims and rising US government bond yields.

The S&P 500 closed 0.2 per cent lower, at 4,473, the blue-chip Dow Jones Industrial Average also ended the day 0.2 per cent lower, at 34,751. The tech-heavy Nasdaq Composite gained 0.1 per cent, to close at 15,181.

The number of first-time applicants for unemployment benefits came in at 320,000, or 20,000 more than the previous week.

Retail sales rose 0.7 per cent in August, on the back of stronger online purchases.

Amazon stocks gained 0.3 per cent, clothing company Gap closed 1.5 per cent higher, online marketplace Etsy rose by 3 per cent.

"Looking at today, clearly we had positive news from retail sales and it looks as if the massive slowdown in the economy is not materialising as a lot of people expected," said Ryan Detrick, senior market strategist at LPL Financial.

"It's a nice reminder that the economy is still taking two steps forward for each step back even amid the COVID concerns."

Energy stocks down

Energy stocks tumbled after oil prices cooled following Wednesday's surge as threats to the Gulf of Mexico from Hurricane Nicholas lessened.

The benchmark Texas crude oil dropped 0.4 per cent, to $US72.3 a barrel, while Brent crude oil fell 0.4 per cent, to $US75.44 a barrel at 4:34pm AEST.

The spot gold price was up 0.4 per cent at $US1,763 an ounce. 

The yield on 10-year US Treasury bonds was up 2 basis points, to 1.324 per cent.

The two-year US Treasury bond yield was up 0.6 basis points, at 0.219 per cent.

In European markets, the STOXX 600 index gained 0.4 per cent, to sit at 465.9, Germany's DAX closed almost a 0.25 per cent higher, at 15,651, and Britain's FTSE rose 0.16 per cent, to 7,027.

ABC/Reuters