The sharemarket struggled to gain traction yesterday as investors traded cautiously after seven straight weeks of gains.
The benchmark S&P/ASX 200 closed down 6.5 points,or 0.1 per cent,at 4717.3.It hit a 19-month high of 4750.7 in early trading.
Industry groups mostly weakened,with profit-taking evident in the materials,financials,industrials,healthcare and telecommunications sectors.
The S&P 500 Index in the US gained 0.4 per cent on Friday as investors brushed off speculation that the newly released Federal Reserve Open Market Committee meeting minutes suggested quantitative easing may be unwound sooner than expected.US stocks got a boost after jobs growth in December roughly met economist estimates and a reading on non-manufacturing economic activity was surprisingly strong.
"The market is not yet expensive and we've got a lot of stimulation occurring globally,"said Peter Morgan,investment adviser at Patersons."I think the market overreacted to the FOMC minutes showing some dissent on quantitative easing."
Consumer staples stocks outperformed the benchmark index even as caution prevailed yesterday.Wesfarmers,Coca-Cola Amatil and Metcash rose between 0.4 per cent and 0.6 per cent.
However,Lynas surged 14 per cent after saying it expected to have rare-earths products from its Malaysian refinery ready for sale within weeks.
The Australian producer continues to face legal challenges in Malaysia,where protests have erupted over potential environmental damage from the plant.
CommSec market analyst Juliette Saly said the local market failed to follow the US as local resources companies struggled following falls on the London Metals Exchange.
"We've again seen very low volumes and not a lot of action on the local market,"Ms Saly said.
"What has held us back a little is the big miners."
Pure iron ore plays also gained after spot iron ore prices rose 2.3 per cent to a 19-month high on Friday.Fortescue Metals and Atlas Iron both rose 0.6 per cent,but closed well below their intraday highs.
Other heavyweight stocks including BHP Billiton,Rio Tinto,Commonwealth Bank,Telstra,CSL and Brambles fell between 0.2 per cent and 1.4 per cent,indicating that some profit-taking was occurring after the market surged 9 per cent from mid-November to last week.
The stockmarket rose for seven weeks in a row as investors anticipated the last-minute deal struck last week to avert the so-called fiscal cliff,which had threatened to tip the US economy into recession."I wouldn't say that we have been inundated with buy orders from people coming back from holidays,"Patersons'Mr Morgan said.
"It would be nice to have some actual earnings improvement and positive outlook statements from companies to justify further gains in the market."
US and Australian earnings reports are due for release in the coming weeks.
The spot price of gold in Sydney finished at$US1661.65 per fine ounce,up$US11.75 from Friday's local close.
National turnover was 1.2 billion shares worth$2.9 billion,with 474 stocks up,440 down and 360 unchanged.
