THE sharemarket lost ground after a mixed session on Tuesday, as miners and banks led the retreat amid caution before the start of the US earnings season and debt ceiling negotiations.
The ASX200 closed 27 points lower to finish at 4690.2, while the broader All Ords ended Tuesday's trading session half-a-percentage point down at 4712.3.
"There's a few headwinds in the shorter term starting to blow," said a Patersons Securities broker, Lew Fellowes.
"While markets have had a good run into the end of the calendar year, there are a few issues that could potentially put a little bit of pressure on the domestic market."
Questions about whether the recent rise in iron ore prices, which have soared to near 15-month highs, was sustainable added to further caution in the market, CommSec analyst Juliette Saly said.
The mining giants closed lower, with Rio Tinto falling for the second day, closing 80¢ down at $66.60. BHP Billiton slipped 31¢ to $37.50, while Fortescue fell 15¢ to $4.74.
Westpac finished flat at $26.28 as the three other big banks - ANZ, NAB and Commonwealth Bank - all closed lower. Shares in the Commonwealth Bank fell about 2 per cent after reaching a record high on Monday.
Energy stocks gained on stronger oil prices, with Woodside rising 1 per cent. Linc Energy rose 10.9 per cent after it said it broke an oil production milestone of 6000 barrels a day.
Defensive stocks were mixed, with Telstra rising 0.2 per cent, while shares in the blood products manufacturer CSL fell 0.4 per cent.
"I don't think there's a lot of conviction at the moment," Ms Saly said. "There are a few tests for markets this week.
"We've got the European Central Bank meeting and also the Bank of England meeting, so perhaps there could be a bit more caution coming through in the next couple of days. And there's the debt ceiling negotiations at the end of February."
The US market was expected to have a fairly quiet session.
Meanwhile, the dollar was slightly higher, despite losing ground after data showed Australia recorded its biggest trade deficit since March 2008.
Late on Tuesday, the dollar was trading at US104.82¢, up slightly from US104.72¢.
The ANZ currency strategist Andrew Salter said the dollar rallied past US105¢ early in the session but weakened following the release of trade data for November.
The trade deficit widened to $2.637 billion in November, which was the biggest deficit since March 2008.
- Mark Cutifani, an Australian, has resigned from his position as chief executive of AngloGold Ashanti to head the global mining company Anglo American.