The sharemarket closed lower on Wednesday, dragged down by the four big banks.
At the close of trade, the benchmark S&P/ASX 200 Index was 25.5 points, or 0.5 per cent, down at 5092.4. The All Ordinaries Index was 24.2 points, or 0.47 per cent, lower at 5104.4.
Falls among financial stocks came despite some gains in the materials sector, with the big miners finishing strongly.
RBS Morgans Private client adviser Bruce Smith said the local market was pulled down by the banks' poor performance.
"There's a pretty strong perception now that the banks are fully valued or overvalued and it's a dangerous time to be continuing with the yield play," he said.
UBS and Deutsche Bank have both described the Australian banking sector as overpriced.
Mr Smith said investors were beginning to look to the resources sector, which had recently lagged.
Adding to the pain among the financial stocks, National Australia Bank shares dived 59¢ to $30.95 after it announced plans to simplify its business and remove complexity and duplication. ANZ dropped 57¢ to $28.48, Commonwealth Bank fell $1.20 to $69.38 and Westpac lost 66¢ to $30.50.
The mining giants all closed higher. BHP Billiton gained 24¢ to $35.91 and Rio Tinto jumped 18¢ to $62.10.
Qantas shares gained 3.5¢ to $1.745 after it said a possible strike by hundreds of security screeners at Melbourne Airport over Easter would not affect flights.
National turnover was 1.6 billion securities worth $4.9 billion.
Meanwhile, the bond market was stronger as traders started to buy again after a fall in prices earlier in the week.
"There is a feeling that the market sold off too far without any support from economic data," UBS interest rate strategist Matthew Johnson said. There was good demand when yields for three-year bond futures hit 3 per cent and 10-years reached 3.5 per cent.
The March 10-year bond futures contract was trading at 96.445 (implying a yield of 3.555 per cent) on Wednesday, up from 96.400 (3.600 per cent). The three-year contract was at 97.005 (2.995 per cent), up from 96.980 (3.020 per cent).
Mr Johnson said the focus for the bond market during the offshore session on Wednesday night would be the release of US retail sales for February.