The Australian share market fell today as Japan's share market succumbed to profit taking, reports from Orica and Santos disappointed the market, and some traders predicted a sharp fall in the US share market.
Investors were sidelined before the upcoming domestic earnings period and federal government election.
The benchmark S&P/ASX 200 closed down 0.4 per cent at 4972.1 points after hitting a four-day low of 4962.1.
Share trading volume rose to $4.6 billion, exceeding the 20-day average of $4.1bn.
The index initially rose to 5005.0 after the U.S. S&P 500 hit a record high on better-than-expected earnings and economic reports. However, it reversed course after Japan's Nikkei 225 fell as much as 2.5 per cent before the Upper House election this weekend.
"I'm very bearish and have bought a lot of September 4700 puts (S&P/ASX index options that give the right to sell) for clients," said Shaw Stockbroking senior investment adviser Shawn Hickman. "I expect the S&P 500 to fall 10 per cent in the next month. Japan's share market weakness and profit warnings in Australia are just adding to the concern."
Expectations of a fall on Wall Street were fuelled by a 6.3 per cent fall in Microsoft and a 4.1 per cent fall in Google shares after the close of US trading.
Orica fell 13 per cent after the explosives maker warned that its fiscal 2013 net profit after tax would fall 10 per cent, due to weaker global markets.
Elsewhere in the materials sector, BHP Billiton fell 1.1 per cent and Rio Tinto declined 0.8 per cent.
Santos fell 3.7 per cent after the energy producer lowered its fiscal 2013 production guidance to 52 million to 55 million barrels of oil equivalent from a prior forecast of 53 million to 57 million. The downgrade followed a power outage at a production facility in Vietnam and a faster-than-expected decline in its Sangu natural gas project in Bangladesh.
Financials mostly weakened, with Westpac, QBE and AMP down 1.0 per cent -2.1 per cent.
Martin Lakos, division director at Macquarie Private Wealth, said investors were marking time before reporting season which kicks off later this month and any news about the upcoming federal election, which must be held by November.
"I think businesses and consumers are holding off until there's a higher degree of certainty (about the federal government)," he said.
Macquarie's Mr. Lakos expects the second-half earnings of companies in the S&P/ASX 200 to fall by 1 per cent, but his firm sees 5 per cent growth in industrial sector earnings, which would be the first rise in 2 1/2 years.
Based on an Australian dollar forecast of US$0.9000 and a cash rate expectation of 2 per cent, Macquarie expects fiscal 2014 earnings growth of 13 per cent -14 per cent for S&P/ASX 200 companies.
