An early rally in the big banks ran out of puff on Monday, helping to push the local sharemarket into the red as steep drops in miners and poor local retail sales data took their toll on sentiment.
The S&P;/ASX200 index slipped 0.1 per cent to close at 5615.6, despite opening 0.7 per cent higher following big jumps in US financial stocks on Friday after the Trump administration moved to roll back banking rules implemented after the 2008 global financial crisis.
But at the close of trade, Commonwealth Bank was up just 0.3 per cent, Westpac gained 0.5 per cent, while ANZ dropped 0.3 per cent. National Australia Bank was the best performer among the big four, adding 0.8 per cent following a quarterly update that largely hit expectations, despite cash earnings slipping 1 per cent.
Regal Funds Management analyst Omkar Joshi said while NAB's earnings were "soft" due to rising expenses, "pleasingly, net interest margins have started to stabilise".
Telstra was one of the biggest winners among blue chips, rising 0.8 per cent, as was gold mining heavyweight Newcrest, which rose 2.5 per cent to extend a recent rally, after the precious metal's price pushed above $US1220 an ounce.
Other miners were among the biggest drags on the market, with BHP Billiton falling 1.1 per cent and South32 sliding 4.4 per cent as commodity prices retreated. But Rio Tinto bucked the trend, gaining 0.6 per cent ahead of its earnings report on Wednesday.
While Wall Street trades near all-time highs, the local sharemarket has turned into one of the global underperformers in 2017, falling nearly 1 per cent since the start of the year as the Trump rally runs out of steam while local earnings season has started with a number of profit warnings.
But the market's dynamic could change once company reporting really takes off this week, with analysts predicting bumper profits in the mining sector should see earnings for the market overall climb for the first time in two years.
"Importantly, recent months have actually seen earnings upgrades – a rare phenomenon," said Deutsche equity strategist Tim Baker who remains upbeat on resources stocks.
Outside the resources sector, the prospects are less bright, as a number of disappointing company updates - including Brambles and James Hardie - showed last week.
"We remain cautious around stocks exposed to Brexit, and to the Australian consumer (spending having slowed a lot over the past year)," Mr Baker said.
QBE, Rio, JB Hi-Fi and Amcor are among the companies that could pleasantly surprise shareholders when they release interim profit numbers this month, while REA Group and WorleyParsons had the potential to disappoint, Deutsche said.
Stock Watch: Santos
It wanted $500 million, but in the end had to make do with $201 million. Santos's move to tap retail shareholders for more money proved relatively unpopular, as the oil and gas producer outlined on Monday. "The [share purchase plan] gave retail shareholders the opportunity to participate in Santos's turnaround strategy following the successful completion of the institutional placement". Just before capital markets shut down in mid-December, Santos raised $1 billion via an institutional placement at $4.06, and then turned to small shareholders with a share purchase plan at $3.94. But with the company's shares unable to get much traction above $4 in recent weeks, smaller shareholders kept their hands in their pockets. Santos shares fell 0.8 per cent to $3.92 on Monday.
MARKET MOVERS
Iron ore
Iron ore futures dropped again on Monday as Chinese traders continue to sell following their return from their New Year break. Prices for the bulk commodity on the Dalian commodities exchange dropped a further 2.8 per cent in late trade, after shedding 3.2 per cent on Friday, when Chinese policymakers surprised the market by lifting rates. Traders also fret that already hefty stockpiles of the steel-making material have continued to build-up over the holiday season. The extent to which post-holiday demand can balance supply will be a focus into March, an analyst said.
Gold miners
Producers of the precious metal continued to shine, extending their incredible run in 2017. The All Ordinaries gold miners index has jumped by a fifth this year, as gold nudged higher on Monday to above $US1220/ounce, its highest in approaching two months. Worried investors, a weaker US dollar and lower chances of US rate rise have all played their part. The likes of St Barbara, Saracen Minerals, Resolute Mining and Northern Star Resources were among the best performers in the top 200 for the session.
Retail sales
The ASX took another turn for the worse during trade following the release of retail sales data for December. Numbers from the ABS showed a disappointing slip in sales for the month, although economists were quick to point out that the figures over the final three months of the year, adjusted for price changes, remained robust - a further sign that the economy escaped a second consecutive quarter of contracting GDP. The Aussie dollar's response to the soggy numbers was muted, with the currency holding around US76.6¢.
Super Bowl
New England Patriots' incredible comeback victory over the Atlanta Falcons could spell gloom for Wall Street. According to the "Super Bowl indicator", if a team from the American Football Conference wins the game's biggest prize, history suggests an 80 per cent chance that US stocks will sink that year, BetaShares chief economist David Bassanese said. The Patriots have won four Super Bowls since 2000, and the market was down in three of those four years. But will history repeat? "Rising bond yields and high price-to-earnings valuations could well check Wall Street's rise this year," he said.