The sharemarket pulled back yesterday as profit warnings in the mining services and consumer discretionary sectors continued to drag on sentiment.
The benchmark S&P/ASX 200 closed down 0.6 per cent at 5180.1 points after falling to 5160.6.
Trading value was strong at $5.3 billion, well up on the 20-day moving average of $4.3bn.
Industrials led broad-based falls, with Transfield Services, Fleetwood and Fantastic Holdings all down between 24 per cent and 32 per cent after they cut earnings expectations.
Boart Longyear cut its earnings estimate, but the downgrade was no worse than expected by the market. Shares in the mineral exploration and drilling services company closed down 0.6 per cent at 78c.
Profit warnings from UGL, Sedgman and Wesfarmers last week suggested the mining services and retail sectors were not performing as strongly as expected. The perception that the dollar would continue to slide against the greenback was also viewed as a negative by some.
"The combination of our dollar falling rapidly and our market having some areas of fundamental weakness means it's logical for offshore investors to avoid or short-sell our market," White Funds Management managing director Angus Gluskie said.
"People believe the general trajectory for the exchange rate is going to be down for some time if not some years."
Financials were the main drag on the market, with big banks down between 0.8 per cent and 1.4 per cent because of concern that high-yield stocks had peaked.
Goldman Sachs institutional dealer Richard Coppleson said he believed high-yield stocks would fade this year because the Reserve Bank might be finished cutting interest rates, domestic employment data was improving and the dollar was likely to continue falling.
However, in a sign that investors' appetite for high-yield equities may have some way to go, Telstra shares rose 0.6 per cent to close at an eight-year high of $5.13.
Goldminers also rose, with Newcrest Mining up 7.1 per cent after spot gold gained 2.6 per cent.
The dollar climbed in Asian trading as the US dollar slid ahead of a speech early tomorrow by Federal Reserve chairman Ben Bernanke. At 5pm AEST, the dollar was changing hands at US98.17c, up US0.6c.
David Scutt, a currency trader at Arab Bank in Sydney, said Mr Bernanke was likely to discuss the timeline for a limited trimming back of the central bank's economic stimulus, which has supported the world's biggest economy since the global financial crisis in 2008-09.
While Mr Bernanke would affirm that the Fed's bond-buying program would be needed to support US economic growth for some time, he might point to the winding back of the Fed's buying of mortgage-backed securities, Mr Scutt said.
