Investors take a cautious line as headwinds near
The S&P/ASX 200 Index 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 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.
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 dropped 15¢ to $4.74.
Westpac finished flat at $26.28 as the three other big banks - ANZ, National Australia Bank and Commonwealth Bank - all closed lower. Commonwealth Bank fell about 2 per cent on Tuesday after reaching its highest-ever share price in the previous session.
Energy stocks gained on higher oil prices, with Woodside rising 1 per cent. Oil and gas producer Linc Energy rose 10.9 per cent after it said it broke an oil production milestone of 6000 barrels a day.
Coal seam gas producer Westside added 1.2 per cent after it said it was continuing discussions with a party that submitted a conditional takeover proposal in November.
Defensive stocks were mixed, with Telstra up 0.2 per cent, while blood products maker CSL was down 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. And there's the debt ceiling negotiations at the end of February."
The US market was expected to have a fairly quiet session overnight ahead of aluminium manufacturer Alcoa's release of its earnings results for the fourth quarter of 2012 after the closing bell.
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 at US104.82¢, up slightly from US104.72¢.
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The S&P/ASX 200 slipped 27 points to close at 4690.2 and the broader All Ordinaries was down about 0.5% at 4712.3. The retreat was driven by miner and bank weakness as investors grew cautious ahead of the US earnings season and looming debt ceiling negotiations.
Investors questioned whether recent gains in iron ore — which hit near 15-month highs — were sustainable, adding to selling pressure on miners. Rio Tinto fell 80¢ to $66.60, BHP Billiton slipped 31¢ to $37.50, and Fortescue dropped 15¢ to $4.74.
Most major banks closed lower while Westpac was flat at $26.28. Commonwealth Bank fell about 2% after reaching a record high in the prior session, with ANZ and National Australia Bank also finishing lower as investors took a cautious stance.
Energy stocks generally gained on higher oil prices. Woodside rose about 1%, Linc Energy jumped 10.9% after saying it hit an oil production milestone of 6,000 barrels a day, and coal seam gas producer Westside added 1.2% amid ongoing talks with a party that made a conditional takeover proposal.
Defensive names were mixed: Telstra was up around 0.2% while blood-products maker CSL was down about 0.4%, reflecting uneven investor conviction across defensives during the pullback.
The article highlights several key tests for markets this week: central bank meetings at the European Central Bank and the Bank of England, the start of the US earnings season (including Alcoa's results), and ongoing US debt ceiling negotiations scheduled for the end of February.
The Australian dollar was slightly higher despite data showing Australia recorded its biggest trade deficit since March 2008. Late on Tuesday the Aussie was trading at about US104.82¢, up marginally from US104.72¢.
According to market commentators quoted in the article, a few short-term headwinds — like uncertainty over iron ore prices, upcoming central bank meetings and US debt-ceiling talks — are creating limited conviction and could put pressure on the domestic market in the near term.
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