Australian shares reversed early gains as a warning about financial bubbles from China's top banking regulator overshadowed a pledge from the Reserve Bank to defend low borrowing rates.
The S&P/ASX 200 hit its highest level in a week before rolling over to a loss of 27 points or 0.4 per cent.
What moved the market
A 71-point morning rally unwound after the chairman of the China Banking and Insurance Regulatory Commission told reporters he was "very worried" about US and European markets. Guo Shuqing listed stocks and Chinese property as potential asset bubbles, according to Bloomberg. Guo told reporters financial markets faced corrections "sooner or later" because asset prices did not reflect the underlying strength of economies.
The ASX was already on the fade, but quickened its descent as US futures and Asian markets headed south. S&P 500 futures fell 15 points or almost 0.4 per cent. The Asia Dow shed 0.55 per cent. China's Shanghai Composite dropped 0.99 per cent, Hong Kong's Hang Seng 0.66 per cent and Japan's Nikkei 0.77 per cent. The dollar eased 0.18 per cent to 77.56 US cents.
Guo's sobering assessment seized the spotlight from the Reserve Bank's monthly policy update. The RBA left the cash rate on hold at 0.1 per cent and reaffirmed its commitment to defend its bond yield target.
"The Bank remains committed to the 3-year yield target and recently purchased bonds to support the target and will continue to do so as necessary," Governor Philip Lowe said. "Also, bond purchases under the bond purchase program were brought forward this week to assist with the smooth functioning of the market. The Bank is prepared to make further adjustments to its purchases in response to market conditions."
The bank reiterated it will not increase the cash rate until inflation settles within its 2-3 per cent target range. "The Board does not expect these conditions to be met until 2024 at the earliest," Lowe said.
A session that began with ten of eleven sectors moving firmly higher ended with just two in the green. Consumer staples gained 0.8 per cent and financials 0.4 per cent. Resource stocks sold off with commodities.
Macquarie Group was the best of the financial heavyweights, rising 1 per cent. ANZ added 1.1 per cent, CBA 0.5 per cent and NAB 0.5 per cent. Westpac dipped 0.1 per cent.
Supermarkets Coles and Woolworths rose 1.4 and 0.5 per cent, respectively. Industrial giants Brambles, Aristocrat Leisure and Transurban all edged up 0.2 per cent.
The best performers on the wider market were dairy company A2 Milk +7.6 per cent, metal recycler Sims +5.2 per cent, automotive retailer Eagers +4.5 per cent and media group Nine Entertainment +4.2 per cent.
Mining giants BHP and Rio Tinto hit new peaks before the rot set in. BHP finished 1.9 per cent lower. Rio shed 0.4 per cent. Both are due to pay record dividends this week. Fortescue Metals, which paid out yesterday, slumped 4.7 per cent.
Bond surrogates were among the session's principal drags, paring yesterday's strong gains. Property giant Goodman fell 0.8 per cent, Telstra 1.3 per cent, CSL 0.2 per cent and Wesfarmers 0.2 per cent.
Gold stocks dragged for a second session after the yellow metal declined for a fifth night. Gold slid $11.50 or 0.7 per cent to $US1,711.50 an ounce. Gold Road Resources gave up 8.1 per cent, Westgold 6 per cent and Newcrest 2.5 per cent.
Energy giant Woodside slipped 1.8 per cent as oil continued to lose ground ahead of a meeting of the OPEC+ oil cartel. Brent crude eased another 68 cents or 1.1 per cent today to $US63.01 a barrel.
"Commodities were mostly weak overnight as the dollar regained a bit of ground," Axi Chief Global Market Strategist Stephen Innes said. "OPEC+ will meet this Thursday, and expectations are that despite Saudi Arabia's call for caution, most members will push for an increase in output."
Meditech Mesoblast dipped 4.9 per cent after raising a US$110 million lifeline from a US investor group. The funds will come from SurgCenter Development, described as "one of the largest private operators of ambulatory surgical centers in the US specializing in spine, orthopaedic and total joint procedures".
Platinum Asset Management dropped 3.6 per cent as it traded without its dividend. Other companies going ex-dividend included St Barbara -2.2 per cent and Cleanaway Waste -2.2 per cent.
Personal protection provider Ansell faded 0.1 per cent after announcing it "may" recommence its share buyback program on Friday following a pause.