The Australian sharemarket rolled over into the red as iron ore futures tumbled and fading hopes for European Central Bank stimulus stunted bullish sentiment.
Following a flat lead from Wall Street where volumes remained in terminal decline, the S&P/ASX 200 index dropped 26.8 points, or 0.47 per cent, to 5624.4 with miners and the major banks all losing ground.
The Australian dollar jumped US0.4ï¿½ to US93.60 after the private capital expenditure growth of 1.1 per cent in the June-quarter beat forecasts for a 0.9 per cent decline, knocking the outlook for interest rate relief this year.
The 2014/2015 expenditure outlook showed a 10 per cent drop was in order this year.
"This update confirms that a sharp downturn in mining capex is in prospect," Westpac economist Andrew Hanlan said. "The major positive from this survey is that not only have service investment plans matched the relatively strong result suggested three months ago, but they have been upgraded. This will provide policymakers with some comfort that, despite the economy experiencing a temporary soft spot in Q2 2014, there are increasing signs that the transition away from growth led by the mining investment boom to strength across the broader economy will continue to unfold over the year ahead."
Government 10-year yields, however, fell 3.8 points to 3.291 per cent as eurozone growth doubts sparked a scramble for high yielding investment grade assets on reports the ECB would not announce an asset buying program next week.
Last night US 10-year yields dropped 4 points to a 16-month low of 2.36 per cent and German yields out to three years all traded in negative territory while German 10-years dropped points to a measly 0.905 per cent as investors hunkered down ahead of the end of US Federal Reserve stimulus in October.
Other Asian stocks also floundered after the US S&P 500 index showed lack of buyer conviction, rallying late from deep in the red to a marginally higher.
The Shanghai composite index was off 0.6 per cent at the close of the ASX.
In Tokyo the Nikkei index was down 0.6 per cent.
Spot iron ore fell 0.8 per cent to a fresh two-year low of $US88.20 a tonne, while Dalian iron ore futures slumped 2.7 per cent today and steel rebar futures fell 1.2 per cent to a fresh five-year low.
Copper lost 0.3 per cent to $US7020 a tonne and gold rose $US4 to $US1286 an ounce.
Only four of the top 20 companies finished the day in positive territory.
Qantas bucked the trend though, with its shares jumping nine cents, or 6.95 per cent, to $1.385 due to its underlying annual loss proving better than expected.
Lonsec senior client adviser Michael Heffernan said the sheer volume of companies going ex-dividend, meaning new buyers are no longer entitled to the latest dividend, hampered trade.
"Companies going ex-dividend tends to take the edge off the market and there were quite a few of those today," he said.
"I don't think any of the, were major blue chip stocks, but nonetheless when you get the volume of stocks going ex-dividend it's always going to be a negative influence."
The big miners lost ground as iron ore prices fell to near five year lows.
BHP Billiton lost 45 cents to $36.88, Rio Tinto shed $1.07 to $63.06 and Fortescue Metals dipped 17 cents to $4.14.Atlas Iron also slumped after the company admitted it would no longer be profitable if iron ore prices continue to fall.
Its shares fell 4.5 cents, or 7.3 per cent, to 57 cents.
Most of the big banks fell, with ANZ losing 17 cents to $33.37, Westpac shedding 11 cents to $35.01 and NAB dropping three cents to $34.77.
The broader All Ordinaries index was down 27.6 points, or 0.49 per cent, at 5,621.3 points.
The September share price index futures contract was down 25 points at 5,604 points, with 18,202 contracts traded.
National turnover was 2.5 billion securities worth $5.6 billion.