Investors stayed on the sidelines on Wednesday on the eve of a decision from the US Federal Reserve on whether to begin tapering its monetary stimulus program.
The benchmark S&P/ASX 200 Index dipped 6.2 points, or 0.1 per cent, to 5097, while the All Ordinaries slipped 6.8 points to 5099.3.
The market got a weak lead after equity markets in the US and Europe fell before a decision by the Fed on reducing its $US85 billion in monthly asset purchases.
"Delaying the taper until March would be more cautious and appropriate," said Equity Trustees chief investment officer George Boubouras. "However, it is very clear the taper will begin soon and that markets have started to price this in.
"If the Fed does start the long process of withdrawing artificial liquidity this month, the key risk is a sharp spike in long-dated US bond yields."
Telecoms was the best-performing sector on Wednesday, as Telstra rose 0.4 per cent to $5.04.
Utilities stocks were broadly higher following the release of the Australian Energy Regulator's final rate of return guidelines, which were largely unchanged from the draft released in August.
In the Reserve Bank's semi-annual testimony to Parliament, governor Glenn Stevens told politicians that "monetary policy can't force spending to occur" and repeated his assertion the currency must depreciate.
At the local close, the dollar was buying US89.04¢, down from US89.41¢ at the previous close.
The big four banks were mixed. ANZ added 0.7 per cent to $30.70. Addressing the bank's annual meeting, chairman John Morschel said the outlook for the world economy was becoming more settled but risks remain. As expected, David Gonski was appointed as the next chairman of the board. National Australia Bank edged 1¢ higher at $33.41. Commonwealth Bank fell 0.3 per cent to $73.68, while Westpac dropped 0.8 per cent to $30.62.
QBE Insurance Group reclaimed 2.3 per cent to $10.39.
The big metals and mining stocks were higher, despite weaker commodity prices. BHP Billiton rose 0.4 per cent at $35.79, while Rio Tinto added 3¢ to $65.33.
Online travel company Wotif fell 31.8 per cent to $2.85, after it warned first-half annual profit would fall by up to 20 per cent and said the second-half outlook was also soft.