The share market tested 7400 for the first time before trimming gains as Asian equities eased ahead of tonight's US central bank policy update.
The S&P/ASX 200 hit a record at 7406.2 before paring its advance to 7386. An initial 27-point rally withered to a final tally of seven points or 0.09 per cent as caution set in. Today's rally extended the index's winning streak to four.
Commonwealth Bank, Woolworths and Wesfarmers continued their record runs. The mining majors faded after China introduced fresh measures to curb soaring commodity prices.
What moved the market
Aside from the ASX, global equity markets have been in a holding pattern this week as a will-they?-won't-they? debate rages over the Federal Reserve's tapering timetable. The US central bank is expected in a policy statement tonight to lay the groundwork for reducing its stimulatory bond-buying program while insisting current inflationary pressures will abate.
"All eyes are glued to the upcoming Federal Open Market Committee statement scheduled today, which is expected to turn into a test of the central bank’s inflation narrative," Kalkine Group CEO Kunal Sawhney said. "Investors are worried over an early tapering of the bond purchase programme by the Federal Reserve. The latest uptick in producer prices has also fanned inflation anxiety," he added.
US stocks ticked lower overnight as traders pared bets on tonight's outcome. The S&P 500 eased 0.2 per cent. The Nasdaq Composite lost 0.71 per cent.
US futures marked time this afternoon. S&P 500 futures inched up a point or 0.03 per cent.
Asian markets mostly traded near session lows as the Australian session wound up. China's Shanghai Composite lost 1 per cent ahead of a monthly economic update at 5 pm AEST. Hong Kong's Hang Seng shed 0.48 per cent and Japan's Nikkei 0.47 per cent. The Asia Dow dipped 0.13 per cent.
"Asian markets are quiet ahead of the Fed," ING Regional Head of Research, Asia-Pacific, Robert Carnell, said. "China's data dump may stir things up a bit today, but the main focus will be on the Fed's message and any hints they may give about taper timing."
Mr Sawhney said Australian investors looking to hedge against inflation had several options.
"Investors can diversify their portfolio with investments that hold the potential to provide them a greater return over the existing level of inflation or at least keep with it. Gold and other commodities like oil and silver, and real estate are usually categorised under good inflation-hedging investments," he said.
"In the share market, dividend-yielding stocks have proved to be solid hedges against inflation in the past. Cherry-picking dividend stars plays an important role here. Over recent months, Bitcoin and other cryptocurrencies have also received strong backing from investors as a hedge against rapid inflation."
Consumer confidence ticked higher last week as Victoria's Covid-19 restrictions eased. The ANZ-Roy Morgan weekly index climbed 0.3 per cent to 111 points. Victoria reported five new locally-acquired cases in the 24 hours to midnight, including two announced yesterday.
The financial sector hit a three-and-a-half-year high as CBA continued its record run. The largest of the big four high-street banks rose 1.32 per cent to a new peak. NAB gained 0.71 per cent and ANZ 0.91 per cent. Westpac finished flat.
Besides CBA, other big guns hitting new highs included Wesfarmers +1.46 per cent, Woolworths +0.46 per cent, ResMed +1.42 per cent, James Hardie +0.82 per cent and Charter Hall Group +1.24 per cent.
The energy sector traded at a three-month high amid increasing speculation crude will test US$100 a barrel in the months ahead. Brent crude climbed 52 cents or 0.7 per cent this afternoon to US$74.51 a barrel, setting a new two-year high.
Woodside Petroleum rose 2.28 per cent, Beach Energy 1.11 per cent, Oil Search 1.46 per cent and Santos 1.04 per cent.
Other heavyweights to notch gains included Goodman Group +0.68 per cent, Coles +0.35 per cent, CSL +0.39 per cent and Brambles +0.27 per cent.
A revenue upgrade lifted burns specialist Avita Medical 12.38 per cent. The company raised its revenue guidance for this quarter to $9.5 - $9.7 million from a previous range of $8.2 - $8.6 million.
“As people begin to return to normal activities after the confines of the COVID-19 pandemic, we have seen an increase in burn accidents requiring treatment with the Recell System in burn centres across the country,” Dr Mike Perry, Avita Medical’s Chief Executive Officer, said.
Mining stocks declined after China launched a two-pronged assault on commodity prices. A central government body ordered state enterprises to limit their exposure to overseas commodities markets. At the same time the national strategic reserves administration issued plans to release state stockpiles of copper, aluminium and zinc.
BHP slid 1.73 per cent, Fortescue 1.63 per cent and Rio Tinto 0.61 per cent. Oz Minerals shed 6.69 per cent, Nickel Mines 4.81 per cent and Mineral Resources 4.34 per cent.
Gold stocks retreated as the yellow metal plumbed its weakest level in a month. Westgold fell 3.18 per cent, Perseus 2.79 per cent and Newcrest 1.29 per cent.
Tech stocks trimmed three days of gains. Nuix gave up 5.8 per cent, Appen 4.35 per cent, EML Payments 2.97 per cent and Nextdc 1.76 per cent.
Grooming specialist Shaver Shop sagged 8.26 per cent after updating guidance. The company said it expected a full-year net profit after tax of $16.75 - $17.5 million on sales of $211 - $213 million.
Gold rebounded after falling overnight to its weakest level in a month. The yellow metal climbed $5 or 0.27 per cent to US$1,861.40 an ounce.
The dollar bounced 0.12 per cent to 76.95 US cents.