The sharemarket fell today, led by resources stocks after minutes of the Federal Reserve's December policy meeting sparked concern US stimulus measures might be scaled back sooner than expected.
The Fed minutes, released Thursday, 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 ongoing 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 $4.1 billion.
The Australian benchmark index still managed to record its seventh straight weekly advance, as investors anticipated the last-minute deal struck earlier this week to avert the so-called "fiscal cliff" which had been threatening to tip the US economy into recession.
BHP Billiton, Rio Tinto and Fortescue Metals fell 0.6 per cent to 3.6 per cent on today, 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 2012'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 0.2 per cent to 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 toward 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 country'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 nation's $US16.4 trillion debt ceiling.
"Delaying some of the U.S. 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."
The upcoming domestic earnings season also remained a potential hurdle for the domestic equity market since the sharemarket's 15 per cent rise last year was accompanied by a significant expansion in forward price-to-earnings ratios, or the price of stocks relative to forecast earnings per share.
"The Aussie economy was obviously slowing down in the second half of 2012, so you'd have to imagine that will be reflected in the profit reporting season," Mr Halmarick said.
Others said the 2013 outlook was mostly positive as China's economy recovered and falling domestic interest rates boosted the attractiveness of shares.
"There's still another $70 billion of private money that was taken out of the market in Australia that hasn't returned," RBS Morgans' Mr Macdonald said. "Falling interest rates are forcing retail investors to move back into equities."
The market was meanwhile awaiting the release of US non-farm payrolls data, due out later today in the US. Forecasts for non-farm payrolls crept up from a recent consensus of 150,000, after private-sector jobs data beat expectations overnight.
