The sharemarket fell yesterday as banks came under pressure when data showed home-loan approvals fell, and a strategy update from National Australia Bank failed to impress investors.
The benchmark S&P/ASX 200 closed down 0.5 per cent at 5092.4 points after falling to a six-day low of 5079.9 in intraday trading.
The index is up almost 10 per cent year-to-date after rising 15 per cent last year. On Tuesday, it touched a 4 1/2-year high of 5163.5.
NAB fell 1.9 per cent after outlining plans for $800 million in cost savings within five years -- the lower end of market expectations of $800m to $1 billion. Credit Suisse said many of the savings initiatives appeared to lag their peers in terms of the timeframe for implementation.
Other major banks including Commonwealth Bank, Westpac and ANZ fell 1.7-2 per cent. The lenders were also weighed down by US peer weakness and negative comments from brokers about the prospects for the sector.
Deutsche Bank moved its sector rating to underweight from neutral, while UBS said fundamental valuations were "very stretched".
Electronics retailer JB Hi-Fi fell 1.5 per cent and Pacific Brands lost 4.6 per cent.
Resources stocks took up some of the slack. BHP Billiton, Rio Tinto and Newcrest Mining rose 0.7-2.9 per cent, helped by stronger copper and gold prices and a strong earnings result from Chilean copper miner Antofagasta early yesterday. Telstra, AMP, Origin, Orica, Coca-Cola Amatil, Crown and Leighton also rose strongly.
"There does appear to be a bit of rotation from banks to resources today, but it's not a dollar-for-dollar switch," CMC Markets chief market strategist Michael McCarthy said.
"That failure yesterday by the index, surpassing the previous high then closing below it, is adding some downward pressure to the market."
Despite their relatively high valuations, Australia's banks remained a better bet than resources companies, which faced uncertainty about China's economic growth, said Platypus Asset Management fund manager Prasad Patkar. "There's no question banks are looking stretched on a valuation basis," he said. "But on a fully franked yield basis, they're still very attractive."
Mr Patkar said investor appetite for high-yield stocks had paused, and a pullback for the overall market was now due.
Investors were not impressed with other more positive domestic economic data that separately showed house-price gains in the fourth quarter of last year and solidly higher consumer sentiment this month.
The data added to mounting evidence that interest-rate cuts that started more than a year ago are fuelling an economic pick-up. The better consumer sentiment at least partly reflects the sharemarket's recent strong gains.
Traders were watching technical support at about 5070. That point marks the 20-day moving average, and an uptrend line drawn from the November 16 low at 4334.3.
