Australian shares ended a seven-session winning streak as investors treated the prospect of a delay in the first stage of a Sino-US trade deal with unease and eyed cooling inflation at home.

Global markets went into reverse on Wednesday after Reuters reported that an interim trade agreement between Washington and Beijing might not be completed in time to be signed in Chile next month, as hoped. That came after hard-earned, but cautious, gains by Australia's benchmark S&P/ASX 200 index over the past week as positive rhetoric from the United States and China buoyed markets. But the unpredictable nature of those talks kept investors from making big bets based on sentiment.

The benchmark closed 0.8% lower, down about 56 points to 6,689.5. That was its lowest closing level in a week, after edging 0.1% higher on Tuesday.

There was broad weakness across the major sectors, with even gold stocks, usually considered safer bets in times of uncertainty, falling.

The so-called "Big Four" banks all fell between 0.6% to 1%. Australia and New Zealand Banking Group reports second-half earnings on Thursday.

Investors will also be closely watching the US Federal Reserve overnight for comments, as the central bank is widely expected to announce a 25 basis point interest rate cut at the end of its two-day meeting.

Locally, data out Wednesday showed slowing consumer price inflation, cooling expectations of a rate by the Reserve Bank of Australia when it meets next week. Governor Philip Lowe had reiterated in a speech on Tuesday the bank's preparedness to ease again, and said returning interest rates to "more normal" levels globally was beyond the control of central banks. "We consider it more likely than not that the bank will launch quantitative easing next year," Capital Economics said in a note, echoing growing expectations by analysts for alternatives to interest rate easing.

Elsewhere, Woolworths Group fell 1.4% after it said it had underpaid thousands of supermarket workers for years and will need to repay as much as A$300 million. That revelation overshadowed a bigger-than-expected jump in supermarket sales for the three months to end-September.

Mining stocks also fell, led by a 1.5% drop in BHP Group and a 1.1% fall by Rio Tinto. New Zealand's benchmark S&P/NZX 50 index was little changed, closing at 10,789.54.