The share market gave up its early gains and lost ground as investors turned cautious ahead of the US central bank’s monetary policy decision.
The benchmark S&P/ASX200 index dropped by 0.12 per cent to 5,713.6 points, after being 0.3 per cent higher in early trade.
Strong gains in the telco sector were outweighed by weakness in most other sectors, most notably property.
Patersons Securities economist Tony Farnham said a strong lead from Wall Street, with the Dow Jones and S&P500 hitting fresh record highs, boosted the local market in morning trade.
Shares began to pull back due to caution ahead of the two-day US Federal Reserve’s Federal Open Market Committee (FOMC) meeting and monetary policy decision due Thursday morning, Mr Farnham said.
“Trading volumes have been low,” he said.
“Domestic investors are cautious ahead of the FOMC meeting and while no one expects them to move on rates, they could announce winding back the Fed’s balance sheet and that can have ramifications on bond yields which would put pressure on sectors like utilities and real estate.”
Mr Farnham said the minutes of the Reserve Bank board’s September meeting, released at 1130 AEST, had more of an impact on the Australian dollar than the share market.
He said the local currency dipped because of the RBA’s comments about the Australian dollar’s recent gains being tied largely to US dollar depreciation, and the bank’s indications it will not move the cash rate anytime soon because of high household debt and weak inflation.
The Australian dollar fell from 79.87 US cents to a low of 79.62 US cents after the release of the minutes, but recovered in afternoon trade to be at 79.81 US cents at 1700 AEST.
On the share market, TPG Telecom rose 5.2 per cent to $5.49 after its annual profit rose nine per cent, and Telstra gained 1.1 per cent to $3.65.
Among the four major banks, Commonwealth Bank was the weakest performer, down 0.5 per cent, and its three rivals were relatively steady.
Miners also gave up their early gains, though remained in positive territory, with BHP Billiton, Rio Tinto and Fortescue Metals gaining between 0.1 per cent and 0.6 per cent.
In the real estate sector, Goodman Group dropped 2.15 per cent to $8.18, GPT Group fell two per cent to $4.96 and Mirvac was 1.7 per cent weaker at $2.26.
ON THE ASX:
* The benchmark S&P/ASX200 dropped 7 points, or 0.12 per cent, to 5,713.6 points.
* The broader All Ordinaries index dropped 6.6 points, or 0.11 per cent, to 5,772.4 points.
* The SPI200 futures contract was down 9 points, or 0.16 per cent, at 5,711 points.
* National turnover was 3.2 billion securities traded worth $5.3 billion.
CURRENCY SNAPSHOT AT 1700 AEST:
One Australian dollar buys:
* 79.81 US cents, from 80.18 US cents on Monday
* 89.16 Japanese yen, from 89.313 yen
* 66.54 euro cents, from 67.12 euro cents
* 58.99 British pence, from 59.02 pence
* 109.67 NZ cents, from 109.70 NZ cents
GOLD:
The spot price of gold in Sydney at 1700 AEST was $US1,307.60 per fine ounce, from $US1,315.12 per fine ounce on Monday.
BOND SNAPSHOT AT 1630 AEST:
* CGS 4.50 per cent April 2020, 2.0678pct, from 2.0488pct on Monday
* CGS 4.75pct April 2027, 2.7638pct, from 2.7488pct
Sydney Futures Exchange prices:
* December 2017 10-year bond futures contract at 97.155 (implying a yield of 2.845pct), from 97.17 (2.83pct) on Monday
* December 2017 3-year bond futures contract at 97.79 (2.21pct), from 97.81 (2.19pct).
(*Bond market closes taken at 1630 AEST previous local session; currency closes taken from 1700 AEST previous local session)
