China slowdown takes toll

Energy and materials stocks weighed heavily after a fall in global commodity prices, and after the Chinese authorities adjusted their expectations for future growth.

Rio Tinto and BHP Billiton shares lost ground after China's Premier, Wen Jiabao, said the country aimed to grow its economy by roughly 7.5 per cent this year, with inflation running at an annual rate of 4 per cent.

That figure, which came in below the big miners' assumption of 8 per cent growth in China, resulted in shares in Rio Tinto falling 84?, or 1.3 per cent, to $65.09, and BHP Billiton shed 30? to $35.39. Woodside Petroleum lost 27?, at $36.03.

The healthcare and utilities sectors were the best performers, with global healthcare company CSL gaining 13? to $33, and Sonic Health rising 13? to $11.78.

Market weakness was compounded by several companies going ex-dividend, which acted as a drag on the market. They included QBE Insurance, which fell 3.3 per cent to $11.85, Brambles lost 1.4 per cent to $7.11, and Iluka gave up 2.4 per cent to $16.97.

The benchmark S&P/ASX200 index shed 16.7 points, or 0.39 per cent, to 4256.4 points, while the broader All Ordinaries index fell 15.8 points, or 0.36 per cent, to 4348.3 points.

With reporting season now over, investors turned their attention to the state of the local economy, and today's Reserve Bank board meeting.

New data provided a mixed view of the local economy and despite a rise in the number of monthly job advertisements last month, investors responded by taking some value from the market.

According to new data released by the Bureau of Statistics, Australian companies made a combined gross profit of $269 billion last year, an increase of just 2.1 per cent over the year, after falling by 6.5 per cent in the December quarter.

It was the second-worst performance for a calendar year in 17 years, since records began. The worst year was 2009, the height of the financial crisis, when profits fell by 13.7 per cent in 12 months.

A gauge of monthly inflation from TD Securities showed the annual rate of inflation had also fallen, from 2.2 per cent to 2 per cent, after rising by only 0.1 per cent in February.

Coupled with a 5.3 point decline in the Performance of Services Index - an index that tracks conditions in retail, financial and other services sectors - the news provided a spotty outlook of the health of the economy, adding weight to the view of the majority of economists that the RBA will keep rates on hold today.

An increase in newspaper and internet job advertisements - an important indicator of future employment - provided some good news, with job ads growing by 3.3 per cent in February, following a rise of 7.5 per cent in January, up 3.6 per cent on a year ago.

Economists said the latest batch of data kept the door open for further RBA rate cuts.

"Inflation is under control, profits are falling, the services sector is contracting and sales aren't meeting expectations, leading to higher inventories," the CommSec chief economist, Craig James, said.

"The good news is that companies are hiring again. The main question is whether the scale of hiring will be enough to lead to a net increase in employment."

Other important events this week include domestic GDP and employment data on Wednesday and Thursday, as well as United States jobs data on Friday.