The sharemarket consolidated yesterday as high-yield plays reacted negatively to reduced hopes of further interest rate cuts following the release of stronger-than-expected domestic jobs statistics.
Meanwhile, profit-taking pushed National Australia Bank lower after its first-half results, and ANZ Bank fell after trading ex-dividend.
The resources sector was positive, however, after mixed inflation figures from China failed to dampen optimism towards the global economy following recent data from the US and Germany.
The Australian Bureau of Statistics said 50,100 more people were employed in April, compared with the 12,000 median forecast of economists surveyed by The Wall Street Journal. Unemployment fell to 5.5 per cent, which was below the median forecast of 5.6 per cent.
China's consumer price index rose 2.4 per cent in April on an annual basis compared with a 2.2 per cent forecast, while the producer price index fell 2.6 per cent rather than the 2.3 per cent expected by economists.
The benchmark S&P/ASX 200 closed down 1.4 points at 5198.4 after hitting a multi-year high of 5211.5 in early trade. The index was up 12 per cent so far this year.
Trading value surged to $7.3 billion, well above the moving average of $4bn.
"For now the market will be very worried that the yield game may have peaked and if that's the case we will see a few institutions switching out of banks and high-yield plays and into the resources and domestic cyclicals," said Goldman Sachs institutional dealer Richard Coppleson. "If we get a pick-up in domestic data over the next four weeks, then rate cuts will be no more and the next move will be a rate hike."
Mr Coppleson recommended buying resources stocks, including BHP Billiton, Rio Tinto, Sandfire Resources, PanAust, Iluka and Fortescue Metals.
Among high-yield shares, Telstra, Sydney Airports and Commonwealth Bank fell 0.3 per cent to 0.8 per cent.
Federal 10-year bond yields rose to 3.16 per cent on the jobs data, after hitting a seven-month low of 3.01 per cent following the Reserve Bank's interest rate cut on Tuesday.
National Australia Bank fell 2.1 per cent despite reporting a 3.1 per cent rise in first-half cash profit to $2.92 billion and a 93c-a-share interim dividend, both of which were slightly above market expectations. ANZ Bank fell 87c, or 2.8 per cent, after going ex-dividend.
Rio Tinto fell 1.2 per cent after chairman Jan du Plessis said the miner did not expect to change its dividend policy.
However, BHP Billiton rose 0.7 per cent, aided by stronger commodity prices.
