Australian shares ended a three-day winning streak, pushing the benchmark index back below 5000 points as the big banks suffered some heavy selling and an early mining rally went into reverse, amid a continued slide in Chinese stocks.
The market was down from the outset, playing regional catch-up due to the Australia Day public holiday, and despite a midday bump, the benchmark ASX 200 finished 1.2 per cent lower at 4946.4 while the broader All Ordinaries closed 1.1 per cent lower at 5000.8.
The falls came despite the Dow Jones on Tuesday notching its best session since December 4, rising 1.8 per cent as US investors looked past another rout in Chinese stocks to focus on a rally in crude oil and some better-than-expected earnings reports.
"It's quite difficult to work out because the Dow Jones was up 282 points and I thought we'd run with it," said Morgans senior client advisor Bill Chatterton. "The only thing I can think of is that the market has moved up a bit over the last few days and there's been a bit of profit-taking. There might also be a bit of nervousness about next month's reporting season.
"It's completely across the board. The only areas that are getting any kind of reprieve are property-related stocks and the gold stocks – Newcrest is up."
December quarter CPI figures – which showed annual inflation increased to 1.7 per cent from 1.5 per cent, above the consensus forecast of 1.6 per cent – did not appear to move the market.
The Aussie dollar jumped around 0.3 of a US¢ to last fetch US70.36¢, suggesting at the margin the number reduced the chance for a RBA rate cut.
Shanghai Composite turns tail
The benchmark Shanghai Composite Index opened up slightly but then quickly turned tail and was down 3 per cent in afternoon trade, after tumbling 6.4 per cent on Tuesday, on track for its worst two-day performance since last year's markets rout in August. But most other regional markets posted solid gains on Wednesday, recovering from the previous session's losses.
Among the blue-chip miners, BHP closed 1.8 per cent lower at $15.01 while Rio Tinto shed 2.7 per cent to $38.11. News that Indonesia's powerful Salim group had bought one of Rio's NSW mines failed to rally the stock. The sale of Rio's second coal mine in NSW in a matter of months extends its retreat from the coal industry amid the extended slump in coal prices.
Fellow blue-chip Telstra lost 0.9 per cent to $5.53.
National Australia Bank fell 3.1 per cent to $26.90 after shareholders voted emphatically in favour of spinning off its poorly-performing United Kingdom business, clearing the way for a float of Clydesdale Bank next week. At a meeting in Melbourne, 98 per cent of NAB investors backed the bank's plan to demerge Clydesdale, a Scotland-based bank NAB bought in 1987.
Among the other banks, ANZ dropped 1.9 per cent to $23.68, Commonwealth Bank lost 1.8 per cent to $77.66 and Westpac declined 1.9 per cent to $30.33.
By far the day's best performer was AWE, which rocketed 56.9 per cent after the oil and gas junior said it had divested its 10 per cent stake in the Sugarloaf shale project in Texas for $US190 million ($271 million).
Oil Search shares plunged 4.6 per cent to $5.99 after the oil and gas explorer flagged the write-off of much of its exploration assets in Kurdistan in the wake of poor results and amid a slump in the oil price, which is also forcing it to cut exploration and development work.
Shares in GUD Holdings plunged 9.7 per cent to $7.13 after the consumer and industrial products company trimmed full year earnings guidance by as much as 8.8 per cent in the wake of unexpected losses from Sunbeam appliances.
Greencross revealed a number of parties are interested in acquiring the pet care group after The Australian Financial Review revealed the company had rejected a $740 million takeover bid from TPG Group. The stock lifted 2.9 per cent to $7.01.