Banks lead the way lower

The local sharemarket trended slightly lower on Tuesday after losses on Wall Street, with banks leading the way lower, while the Australian dollar fell following the Reserve Bank’s rates decision.

The benchmark S&P/ASX200 fell 0.3 per cent to 5856.6 while the broader All Ordinaries Index gave up 0.2 per cent to 5895.8.

The big four banks led the market lower, losing between 0.4 to 1.0 per cent, with Westpac the single biggest drag on the index. The sector was key to the market rally last week that drove the ASX to two-year highs.

Some pullback wasn’t unexpected, as Australian shares were relatively expensive, said JPMorgan Asset Management global equities strategist Kerry Craig. Tuesday’s session was emblematic of the small falls the market has experienced of late – a state of unusually low volatility Mr Craig believes cannot last.

“The expectations around financials and resources are high…They’ve been providing a lot of underlying support. It just becomes more fickle to find those returns when you’re paying this much more [to buy into stocks] than you have in the past.

“The market’s been moving higher at a pretty steady place,” he said. The ASX has moved by more than 1 per cent only four days in the first three months of this year, compared to a long run average of 56 over the year.

“You’ve only had two other years in ASX200 history where the drawdown has been as small as it’s been this year. So we’re going to see some drop at some point.”

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