Miners took up the slack as dividend hunting turned into profit taking today after Prime Minister Julia Gillard ensured seven months of policy uncertainty by announcing a September general election, but the Australian sharemarket still held on to extend its winning streak to 10 straight sessions.
Following the firmer lead from Wall Street the S&P/ASX 200 index climbed 0.4 per cent in early trade, but it slipped to close 7.7 points or 0.16 per cent, up at 4896.7 points with miners up one per cent on average.
With equity bears on the brink of extinction last night the US S&P 500 index shrugged off a slump in US consumer confidence to a 13-month low as it climbed 0.5 per cent to a fresh five year high just 3.7 points shy of its record high of 1565 points.
Although the US Case-Shiller home price index declined for the second month, house prices still finished 5.5 per cent up for the year, and it was enough to support equity market bullishness running at extreme levels.
The weak data underlined confidence that the US Federal Reserve monetary policy announcement tonight would not further startle markets by hinting that ultra-easy monetary policy via quantitative easing would end this year.
However, signalling another view, last night US benchmark 10-year treasury yields traded at a 10-month high of 2.006 per cent following comments from the Fed's December meeting, falling US jobless claims and some firmer housing data that has underpinned claims that the US was firmly on the road to recovery.
The Australian dollar edged up to $US1.0470, shrugging of the 2.8 per cent fall in the DEWR internet skilled vacancies index.
Following US rates higher, Australian 10-year yields climbed 2.3 points to 3.525 per cent to a nine-month high.
The Shanghai composite index was flat at the close of the ASX while in Tokyo the Nikkei index climbed 1.7 per cent as the yen traded near 30-month lows.
Spot iron ore was $US148.50 a tonne on Tuesday, but ANZ global head of commodity strategy Mark Pervan said it was vulnerable to selling ahead of the Chinese New Year starting in a week.
"The sharp drop in Baltic Capesize freight rates in December (down 45 per cent over the month) flags a substantial drop in Chinese iron ore imports in January after record high levels in December," he said. "We also hear that steel mills have built steel yard iron ore stockpiles up to around 32 days of cover, from 26 days in November. An ample level of cover in the Chinese steel industry is seen around 30 days."
More to come