Aust stocks close weaker

Local market slips as investors focus on valuations, downgrade in iron ore space.

The Australian sharemarket closed lower today as investors mull a fully valued market, the approaching end of financial year and a downgrade in the iron ore space.

At the 4.15pm (AEST) official market close, the benchmark S&P/ASX200 index dropped 25.2 points, or 0.46%, to 5,428.8, while the broader All Ordinaries index shed 24.6 points, or 0.45%, to 5,407.9 points.

Official data released today showed the unemployment rate held steady in May, but the data failed to put a lasting dent in the index, which had already dropped in early trade after downbeat offshore leads.

Macquarie Private Wealth investment adviser John Milroy said investors are grappling with full valuations, questioning whether share prices reflect expected earnings growth.

Some tax loss selling is also evident at this time of year, as investors lock in profits or losses as the end of the financial year draws close.

"Clients have had a good year and the market has had a pretty good 12 months, so they will lock in a few losses to offset some gains and try to reduce tax obligations," Mr Milroy said.

Meanwhile, broker Morgan Stanley issued a downgrade of Fortescue Metals Group as worries over the iron ore price persist, casting a shadow over iron ore juniors.

"Clearly with the currency holding up, it doesn't do them any favours," Mr Milroy said.

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