The benchmark S&P/ASX 200 Index and the broader All Ordinaries Index each lost 0.5 per cent, on Thursday to 5624.4 points and 5621.3 points respectively. Surprisingly, Qantas Airways was the standout performer of the day. The stock flew ahead despite revealing a massive blow-out in its annual loss.

Local shares took a soft lead from the United States, where the S&P 500 ended flat on Wednesday night, after closing above 2000 points for the first time in the previous session.

Major markets around Asia fell in the afternoon session amid heightened geopolitical risk as ongoing conflicts in Ukraine and Iraq-Syria escalated.

In local economic news, Australian Bureau of Statistics data showed business investment was stronger than forecast - helped by a lift in outlays by services firms. June quarter capital expenditure rose 1.1 per cent. Consensus expectation was for a 0.9 per cent fall. The Australian dollar got a spike from the news but shares remained depressed.

"The mix of the capex survey was encouraging, but we think the contrast between falling mining and improving non-mining investment might end up more stark," Barclays economist Keiran Davies said.

CIMB equity strategist Shane Lee said the capex data was disappointing overall, despite the better-than-expected headline result.

Qantas Airways lifted 7 per cent to $1.39, despite a much bigger than forecast $2.8 billion annual net loss, the biggest in its history, amid heavy write-downs on its fleet. The size of the loss approaches the $3 billion value of the company as measured by market capitalisation. Investors chose to focus on the lower than expected operating loss and on the airline's more optimistic outlook.

"Nothing was announced about what the company plans to do with its Frequent Flyer business. There is hidden wealth locked up in that division so Qantas is not a lost cause yet," Zurich Financial Services senior investment strategist Patrick Noble said.

"While there have been a few disappointments, overall August reporting season has delivered a pretty solid batch of results," Mr Noble said.

Television broadcaster Nine Entertainment Co dropped 3.3 per cent to $2.03 despite beating its prospectus forecasts to show a rise in full year net profit to $144.2 million.

Cement maker Adelaide Brighton added 0.6 per cent to $3.64 after reporting a bigger than forecast 15.9 per cent drop in net profit after tax for the six months to June 30, but showing record interim revenue.

Private hospital operator Ramsay Health Care gained 1.4 per cent to $52.06 as it revealed a 14 per cent rise in full-year net profit.

The biggest miners were weaker as the spot price for iron ore, landed in China, fell to a new two-year low at $US88.20 a tonne, posting its eight straight day of losses. BHP Billiton fell 1.2 per cent to $36.88, while Rio Tinto lost 1.7 per cent to $63.06.

The big four banks were flat to lower. Commonwealth Bank of Australia edged up 2 cents to $81.14, while Westpac Banking Corporation lost 0.3 per cent to $35.01. ANZ Banking Group fell 0.5 per cent to $33.37, and National Australia Bank slipped 0.1 per cent to $34.77.

Telecommunications was the only sector to finish higher as Telstra Corporation rose 0.2 per cent to $5.54.Woolworths edged down 1 cent to $36.95, ahead of showing its full year results on Friday, Rival Wesfarmers, owner of Coles, was unchanged at $44,76.

A number of major stocks traded ex-dividend, adding to the selling pressure. Notable companies to trade without the rights to upcoming dividends included Ansell, Asciano, Bega Cheese, Navitas, Platinum Asset Management, Super Retail Group, Vocation, and iiNet.