The Australian share market has opened in the red dragged down by the big four banks and the energy sector as oil prices fell to a seven month low in the United States overnight.

At 1040 AEST on Tueday, the benchmark S&P/ASX200 index was down 6.7 points, or 0.12 per cent, at 5,798.5, while the broader All Ordinaries index was down 5 points, or 0.09 per cent, at 5,830.5.

CommSec market analyst Steven Daghlian says Tuesday's softer start was "no huge surprise" with energy stocks down on the back of a 1.1 per cent drop in oil prices in the US overnight.

"That is a major drag on all the big names," Mr Daghlian said.

Santos, Woodside Petroleum and Oil Search were among the worst performers, down between 0.69 per cent and 1.48 per cent at 1040 AEST on Tuesday.

Despite major energy falls, Mr Daghlian said, the financial sector was another main player holding back the market following the release of Moody's credit ratings cut announced after Monday's market close.

"This is the first opportunity for them to react to that and also the bank levy which passed the federal parliament yesterday as well," he said.

The federal parliament on Monday passed its $6.2 billion budget repair levy it plans to impose on the major lenders.

The big four - Commonwealth, ANZ, Westpac and National Australia Bank - fell between 0.02 per cent and 0.57 per cent with Westpac leading the decline.

"They are certainly being hit at the moment," Mr Daghlian said.

Locally, both Tabcorp and Tatts Group's shares have been placed in a trading halt awaiting a determination by the Australian Competition Tribunal on whether their proposed $11 billion merger can go ahead.

Shares in APA Group were flat following news it will build a gas pipeline as part of an expansion to its east coast gas grid after signing a memorandum of understanding with Blue Energy, whose shares were up 12.5 per cent.

Investors took a liking to the news struggling luxury handbag retailer Oroton will receive up to $3 million in credit support from its largest shareholder to help turn its business around as sales continue to slump. Its shares were up 6.28 per cent at $1.10.

Meanwhile, the Australian dollar is back below 75 US cents after the US dollar strengthened following New York Federal Reserve president William Dudley's comments expressing optimism that US inflation would rise, thanks to a tightening jobs market.

The local currency was trading at 75.93 US cents at 1040 AEST on Tuesday, from 76.11 on Monday.

ON THE ASX AT 1040 AEST:

* The benchmark S&P/ASX200 was down 6.7 points, or 0.12 per cent, at 5,798.5.

* The broader All Ordinaries index was down 5 points, or 0.09 per cent, at 5,830.5.

* The March SPI200 futures contract was up one point or 0.02 per cent at 5,744.

* National turnover was 721 million securities traded worth $785 million.

CURRENCY UPDATE:

* The Australian dollar is trading lower at 75.93 US cents, down from 76.11 US cents at Monday's close.

(*Currency closes taken at 1700 AEDT previous local session, bond market closes taken at 1630 AEDT previous local session)

AAP

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