Australian shares ended a choppy session on a sour note on Tuesday, with some strong gains for supermarkets and Origin Energy not enough to offset losses for miners and banks.
The benchmark S&P;/ASX 200 index ended the day down 4 points, or 0.1 per cent, at 5984 while the All Ordinaries finished the session down 3 points, or 0.1 per cent, at 6066. The Australian dollar traded at US76.1¢.
The broadly lacklustre session for the Australian market followed an uninspiring performance overnight from the US, with markets continuing to trade to a pattern that's been in play for some time.
"Markets have ground higher in 2017. Volatility is low and the performance and correlation of high volatility stocks and low volatility stocks has been almost identical," noted Lee Mickelburough, head of Australian equities at Janus Henderson Investors.
"There have been a handful of stocks that have performed strongly to the upside or downside, but the vast majority have traded in a highly correlated fashion," the strategist noted.
Banks and miners were some of the big weights on the Australian benchmark on Tuesday, with BHP down 2 per cent as investors parsed an update on unit costs at its Australian mines and copper prices from the heavyweight miner.
Other metal extractors were also lower following weakness in copper and nickel prices, with copper down 1.1 percent to $US6,863 a tonne, while Nickel dropped 1.7 percent on the London Metals Exchange.
Rio Tinto lost 0.8 per cent while Fortescue declined 3 per cent.
Banks were also broadly weaker, with Deutsche Bank cutting the sector to neutral from overweight while saying it believes the benefits of repricing have now passed.
Westpac lost 0.9 per cent, NAB also fell 0.9 per cent, ANZ declined 0.8 per cent and CBA slid 0.2 per cent.
At the same time, Deutsche Bank strategists increased their weighting to supermarket group Woolworths as part of what they see as a tactical opportunity to buy into consumer exposure.
Woolworths jumped 1.9 per cent and rival Wesfarmers rose 1 per cent.
Origin Energy also climbed, with the energy provider up 2.4 per cent after announcing it was targeting cost reductions at its Australia Pacific LNG liquefied natural gas project and reaffirming its 2018 earnings forecast.
APA Group and AGL also lent support to the utility sector, rising 2 per cent and 1.2 per cent, respectively.
IOOF jumped 2.3 per cent after an upgrade to "overweight" from "equalweight" at Morgan Stanley, with the broker citing the company's increased exposure to Australia's growing super and pension system for the move.
Gambling firm Tatts Group lost 0.5 per cent. It reported that its first quarter net profit jumped almost 15 per cent, boosted by a string of bigger than usual multimillion-dollar lottery jackpots.
Stock Watch: Mayne Pharma
Shares in Mayne Pharma dropped 2.4 per cent after a trading update swept away any hope of a near-term recovery in the US generic drugs market. Management once again advised that the sector continues to face a tough deflationary period driven by aggressive contracting behaviour from the major wholesaler/retailer buying alliances. Largely as a result of this, group revenue as of the end of October was down 12 per cent to $151 million compared to the prior corresponding period. While this is expected to lead to a weak first-half result, management is working on a range of initiatives which it believes will lead to a vast improvement in the company's future performance. Shares are down 53 per cent year to date.
Oil
Oil prices slipped on Tuesday amid uncertainty over a possible extension of output cuts by major crude producers and expectations of higher supply as the Keystone pipeline restarts. Brent crude was off 0.3 per cent at $63.65 while US West Texas Intermediate traded at $57.77 a barrel, after touching $59.05 a barrel on Friday, its highest level since mid-2015, fuelled by the outage of the Keystone pipeline, one of Canada's main crude export routes to the United States. But TransCanada Corp this week said it would restart the 590,000 barrel-per-day pipeline at reduced pressure later on Tuesday after getting approval from US. regulators.
Gold
Gold prices on Tuesday held near six-week highs, supported by a weaker dollar ahead of a congressional hearing on US Federal Reserve chair nominee Jerome Powell and a possible Senate vote on US. tax reforms. The precious metal was fetching $1294.65 an ounce at the end of the Australian trading day. Powell, the nominee to chair the Federal Reserve, defended the Fed's use of broad crisis-fighting powers in remarks prepared for his Tuesday Senate confirmation hearing. A US Senate Republican tax bill strongly backed by President Donald Trump faced potential opposition from two Republican lawmakers who could prevent the sweeping legislation from reaching the Senate floor. Republicans are hurrying to bring the US Senate version of their tax bill to a vote, possibly as soon as Thursday.
Bitcoin
Bitcoin rocketed further towards $US10,000 a coin on Tuesday as fiat currency continues to pour into cryptocurrency. The digital currency has seen an eye-watering tenfold increase in its value since the start of the year and has more than doubled in value since the beginning of October. Bitcoin's price has been helped in recent months by the announcement that the world's biggest derivatives exchange operator CME Group would start offering bitcoin futures.
Aussie
The Australian dollar was back on the defensive on Tuesday as its fading appeal as a higher-yielding carry currency caused a shake-out in long positions against the Japanese yen. The Aussie was at US76.11 cents, after an attempted bounce overnight failed at US76.45 cents. The Aussie suffered most against the yen, hitting a five-month low at 84.31 yen and breaking support at 84.45 yen. The next major chart target was put at 83.68 yen. "We still contend that Aussie will drop through US75 cents one side or other of year-end, driven primarily by a decisive move into negative territory for the likes of the 2-year AU-US swap rate differential," said NAB's global head of FX strategy, Ray Attrill.