The ASX closed at an eight-week low on Wednesday in the wake of hawkish comments by the recently re-appointed Federal Reserve chairman Jerome Powell.

The benchmark S&P/ASX 200 closed 0.3 per cent lower at 7235.9 points, back where it was at the start of October.

There was a sudden change overnight in Mr Powell’s rhetoric, which dragged on Wall Street and left the ASX looking for direction. He binned the ‘transitory’ phrase that has been used to describe supply-chain induced inflation and said the US central bank would likely start tapering its stimulus earlier than expected.

Locally, third quarter domestic GDP figures came in better than expected and gave the market a bit of a boost, but did not stop it closing in negative territory.

Meanwhile, COVID-19 was never far from investors minds, even though it appeared the new Omicron variant would have less impact than Delta.

“The Moderna chief executive raised questions about the efficacy of present vaccines and omicron late in Asia yesterday, which stopped the recovery rally in its tracks,” Oanda’s senior market analyst for Asia Pacific, Jeffrey Halley, wrote in a note to clients.

“Jerome Powell, testifying on the Hill yesterday, added to the tumult, retiring the word “transitory” as his favourite pronoun for inflation, and suggesting that the Federal Reserve could unwind monetary stimulus faster than previously announced. The abrupt change of direction caught markets off guard and deepened the malaise in equity markets.”

The heavily traded Australian dollar touched one-year lows of US70.63¢ in the early hours of Wednesday morning then strengthened.

Iron ore miners had a strong session with Rio Tinto up 2.4 per cent, BHP up 1.4 per cent and Fortescue gaining 1.5 per cent. South32 gained 4 per cent to a four-week high of $3.67 while

Lynas Rare Earths closed at a new nine-year high of $9.11.

Supermarket giants Woolworths fell 2.4 per cent and Coles dropped 1.6 per cent, while fruit and vegetable producer Costa Group hit a 17-month low of $2.75 during the day.

ANZ Bank closed 0.2 per cent lower after revealing a new class action over credit card contracts. The other three big banks closed higher.

Graincorp gained 2.2 per cent after stronger estimates for the winter grains crop.