Australian shares have recovered some of the heavy losses posted in early trade, but remain weaker as investors take a cautious approach ahead of a US central bank meeting.
US Fed chairman Ben Bernanke heads up his final policy meeting on Tuesday night (Australian time), and financial markets expect the Federal Open Market Committee to continue tapering its stimulus measures.
Investors are concerned what effect tapering will have on the Australian market, Lonsec senior client adviser Michael Heffernan said.
The main indices were down by about 1.5 per cent in early trade, but recovered to be down by about 0.6 per cent by the early afternoon.
"We are only down by a muted amount due to a slightly better performance on the American market overnight," he said.
Wall Street fell slightly overnight, but only after a late plunge by the Dow Jones Industrial Average after earlier trading in positive territory.
"The market hasn't taken any prisoners today because every sector is down, but there is always a bright light somewhere," Mr Heffernan said.
Retailers were higher after home entertainment and electronics seller JB Hi-Fi announced its first half profit had grown by 10 per cent.
JB Hi-Fi shares were up $1.33, or more than seven per cent, at $19.62, while David Jones was up 1.5 cents at $2.915 and Myer was 5.5 cents higher at $2.555.
The heavyweight banking and mining sectors were weaker though.
Commonwealth Bank was down 58.5 cents at $74.155, ANZ was down 41 cents at $30.24, National Australia Bank had lost 48.5 cents to $33.335 and Westpac was 27.5 cents weaker at $30.845.
BHP Billiton was down 62.5 cents at $36.415, Rio Tinto had dropped 84 cents to $64.32 and iron ore miner Fortescue had lost seven cents to $5.16.
Oil Search had gained five cents to $8.19 on increased production and revenue.
- At 1234 AEDT on Tuesday, the benchmark S&P/ASX200 index was down 31.2 points, or 0.6 per cent, at 5,209.7 points.
- The broader All Ordinaries index was down 32.4 points, or 0.62 per cent, at 5,221.9 points.
- The March share price index futures contract was five points higher at 5,162 points, with 19,923 contracts traded.
- National turnover was 1.2 billion securities worth $2.4 billion.