THE sharemarket ended marginally lower yesterday, dragged down by losses in mining and energy shares as worries about growth in the United States and China depressed commodity prices.
However, the market outperformed the Asian region for the second straight session, supported by a weaker Australian dollar, which has boosted the outlook for company earnings.
At the close, the benchmark S&P/ASX200 index was down 5.6 points at 4337.9, while the broader All Ordinaries index was down 9.5 points at 4422.
"Our market has held up well considering the weakness which has plagued international markets," Ben Taylor, a trader at CMC Markets, said.
"While some traders believe we are merely playing catch up from our recent underperformance, other investors believe the reason for resilience is a pending Reserve Bank rate cut next week."
Japan's bourse slipped 0.7 per cent, Hong Kong was down 1.2 per cent and China was off 0.6 per cent.
The local resilience and weaker sentiment in the Asian region gave speculators an excuse to increase bets that Reserve Bank may cut interest rates to 4.00 per cent next week.
A stronger currency has made it hard for manufacturers to compete, denting the earnings of companies with operations in the US and elsewhere.
CMC Markets strategist Michael McCarthy said this week's performance signalled a substantial commitment to Australian equities by investors. "The absolute standout is healthcare," he said. "For the second day in a row it's been the top performing sector and it's been quietly buoyant for the last two weeks."
There was an argument that a recent easing in the dollar was pushing up healthcare stocks with offshore exposures such as CSL, but the strong performance in Sonic Health Care indicated that other factors were at play, he said.
CSL gained $1.15, or 3.3 per cent, to $36.30 yesterday, while Sonic added 9? to $12.52.
Other defensive sectors, including IT, consumer staples, utilities, telcos and property trusts, were also in favour. "That suggests that while we are seeing greater commitment to equities in Australia, it is still taking a very cautious shape," Mr McCarthy said.
Telstra firmed 2? to $3.30, Computershare added 17?, or 1.9 per cent, to $8.97, and Woolworths advanced 23? to $25.64.
Banks and financials, excluding property trusts, posted gains for the sixth consecutive day, with the sector rising 7.5 per cent in the past 15 trading days. Three of the big-four banks advanced but Westpac fell 6? to $21.88. Bank of Queensland plunged 41?, or 5.36 per cent, to $7.24 as investors digested the effect of its capital raising.
Materials and oil stocks underperformed, with BHP Billiton falling 36?, or 1 per cent, to $34.25, and Rio Tinto down 17? to $64.36.
Oil Search led energy stocks lower after finishing 15?, or 2.1 per cent, down at $6.91.
Leighton Holdings slumped $1.59, or 6.7 per cent, to $22.16 after it cut its profit forecast by nearly a third because of further losses from its Brisbane Airport Link and Victorian desalination plant works.
Toll road operator Transurban eased 5? to $5.62 after it confirmed its full year distribution guidance despite a difficult operating environment.