The sharemarket ended its winning streak yesterday on concerns that stimulus measures in the US may be scaled back sooner than expected.
The minutes of the Federal Reserve's policy meeting of last month showed disagreement among members as to the best time to halt the central bank's efforts to revive the world's biggest economy.
The record left little indication of which course the Fed would choose and showed some members expressing uncertainty over the benefits of bond purchases.
The benchmark S&P/ASX 200 closed down 0.4 per cent at 4723.8 after hitting an intraday low of 4716.8. Trading volume worth $2.6 billion was light compared with the 2012 daily average of $4.1bn.
BHP Billiton, Rio Tinto and Fortescue Metals fell between 0.6 per cent and 3.6 per cent, even after a 3.4 per cent rise in the spot price of iron ore to a 15-month high.
"Fed minutes should not have surprised the market," Christopher Macdonald, an investment adviser at RBS Morgans, said. "But when you see iron ore miners fall despite another strong rise in iron ore prices, it says we've had such a cracking run that maybe people are wondering whether this is sustainable."
Mr Macdonald said profit-taking was also evident in some of last year's strongest performers -- CSL and Crown, which fell 1.6 per cent and 1.3 per cent respectively. Financials, consumer staples and utilities lent support to the index, however, with Westpac, ANZ, Coca-Cola Amatil and AGL Energy rising between 0.2 per cent and 0.7 per cent.
"December was when the Fed announced an aggressive expansion of quantitative easing," said Stephen Halmarick, head of investment markets research at Colonial First State Global Asset Management. "Now, the minutes say a few Fed members thought they should wind that back towards the end of 2013."
He added that a few dissenting voices on the stimulus exit strategy would carry less weight, in the end, than Federal Reserve chairman Ben Bernanke and his supporters on the dovish side of the debate.
Still, Mr Halmarick said the S&P/ASX 200 had a rough ride ahead, in spite of the fiscal cliff compromise, which postponed massive spending cuts and lifted taxes only on the US's wealthiest.
Since reaching the deal, which some economists said helped avert the immediate risk of a recession, the focus among investors has shifted to another potentially damaging, and related, political row between ruling Democrats and opposition Republicans concerning how to deal with the $US16.4 trillion debt ceiling.
"Delaying some of the US fiscal cliff was good, but I don't think we can assume we are through the worst of the US political process," Mr Halmarick said. "Spending cuts were only delayed for two months, and the US still has to renegotiate the debt ceiling.
"Those discussions will be very acrimonious."
