Bargain hunting and month-end window dressing lifted the Australian sharemarket before closing in the red as other Asian markets struggled with US "tapering" fears.
The S&P/ASX 200 index dropped 0.6 per cent at the open after National Australia Bank was dumped following its profit report. The index bounced to a 0.3 per cent gain before sliding to close 5.3 points, or 0.1 per cent, down at 5425.5 points as bargain hunters stepped in.
The Australian dollar was steady around US94.90ï¿½, but government 10-year yields jumped 5.9 points to 4.033 per cent and benchmark US 10-years rose 3 points to 2.53 per cent after the Fed said downside risks to the US economy had diminished and the economy would grow at a moderate pace.
With many investors expecting a more "dovish" policy statement to sooth global credit markets, economists have begun to revise the odds of the US Federal Reserve tapering its bond purchasing program at a December meeting.
The US dollar pushed higher against the yen and gold dropped $US10 to $US1338 an ounce, despite US ADP private payroll data taking a sharp downturn.
Copper pared an overnight 1.2 per cent rally, sliding 0.6 per cent to $US7250 a tonne while spot iron ore eased 0.1 per cent to $YUS133.20 a tonne yesterday.
Westpac economist Elliot Clarke said given recent weak house sales, durable goods and retail sales data the US Federal Reserve's statement was "best characterised as optimistic".
However, ANZ strategists said they expected the slowing to be temporary and for the data to be convincing enough for the Fed to start tapering in the March quarter.
The Shanghai composite index was down 0.7 per cent at the close of the ASX after bank and consumer staple stock earnings disappointed. Banks reported a surge in profits from the latest credit binge, but bad debts also leapt.
In Tokyo the Nikkei index was down 0.4 per cent.
Domestic data was mixed, with private sector credit increasing just 0.3 per cent in September. Underscoring the lack of business confidence and increasing growth headwinds, business credit eased 0.1 per cent.
New building approvals leapt 14.4 per cent, mostly from a surge in the multi-storey dwellings in NSW and Victoria, while detached house approvals rose just 1.5 per cent.
CMC Markets chief strategist Michael McCarthy said local stocks had performed well considering uncertainty on offshore markets as local banks were told to maintain adequate capital buffers.
“There’s a remarkable resilience amongst most investors - they’re not stepping away,” Mr McCarthy said.
“Perhaps there’s some crisis fatigue. “Their skins have been toughened by the journey of fire we’ve been through over the last five years.”
Defensive and growth stocks performed well, while some investors were booking profits in the banking sector after a recent strong run.
“The overall commitment to the market remains in place,” Mr McCarthy said. New home approvals rose by 14.4 per cent during September, which gave the market a short-lived boost in the middle of the day.
A strong influence today was the continued uncertainty about the timing of moves by the US Federal Reserve to taper its $US85 economic stimulus program.
Among the banks, National Australia Bank dropped dropped 92 cents, or 2.5 per cent, to $35.31, despite a nine per cent rise in annual profit to $5.94 billion.
Commonwealth Bank lost 93 cents to $76.08, Westpac dropped 61 cents to $34.29, and ANZ gained 14 cents to $33.84.
Miners were mixed, with BHP Billiton down one cent to $37.66, Rio Tinto up 55 cents to $63.99 and Fortescue down nine cents to $5.21.
Industrial companies performed well, with BlueScope Steel adding 21 cents to $4.99, Boral gaining 8 cents to $4.94 and Fletcher Building 34 cents higher at $8.69.
Woolworths gained five cents to $34.90 after sales grew by 3 per cent to $15.68 billion in the three months to October.Wesfarmers, the owner of rival Coles, added 69 cents to $42.97.
The broader All Ordinaries index was down 5.1 points, or 0.1 per cent, at 5,420.3.
The December share price index futures contract was five points lower at 5,414, with 30,063 contracts traded.National turnover was 2.1 billion securities worth $5.3 billion.