Aust stocks close lower

The Australian sharemarket closed lower after seven straight days of gains had the local market ready for a small correction.

At the 4.15pm (AEST) official market close, the benchmark S&P/ASX200 index fell 49.5 points, or 0.89%, at 5,486.6 points, while the broader All Ordinaries index also fell 49.2 points, or 0.89%, to 5,466.9 points.

CMC Markets Chief Market Strategist Michael McCarthy said despite today’s dip, the outlook for the Australian market was mostly positive, but there may be an uptick in volatility this week after recent solid gains.

“After seven straight days of gains we were in rarefied territory and a short term correction was clearly on the way,” Mr McCarthy said.

IG Markets Chief Strategist Chris Weston said some broker downgrades on the major banks also weighed on the market ahead of the banks' reporting season.

"Unfortunately (for the bulls) the index has found good sellers and it seems the investment banks can be partially to blame for this, with Citigroup taking the cleaver to Westpac and National Australia Bank’s (NAB) rating, lowering them to a ‘neutral’ and ‘sell’ call respectively," Mr Weston said.

"Morgan Stanley went slightly further and said in a research note that it sees a 70% to 80% chance that NAB will fall in the next 60 days."