The Australian share market closed 0.6 per cent lower, with investors starting to hope that the central bank would cut interest rates for the first time in a year next month.
The local bourse opened almost one per cent down on a weak lead from Wall Street overnight.
By the close on Tuesday both major local indices had made back some of their early losses, with the benchmark S&P/ASX200 index down 24.9 points, or 0.64 per cent, at 3,872.1 and the broader AllOrdinaries index dropped 25.1 points, or 0.63 per cent, to 3,935.6.
The All Ords closed at 3,927.6 on September 26, the lowest since July 2009.
Bell Potter senior adviser Stuart Smith said the market began to turn around after the Reserve Bank of Australia announced – as was widely expected – it would hold interest rates steady for the eleventh consecutive month.
There was now speculation that the RBA’s comments meant the cash rate could be cut before the end of the year, he said.
But Mr Smith said lower than expected trading volumes on Tuesday, after a public holiday in New South Wales, the ACT and South Australia on Monday, had not helped shares, despite enormous values, amid investor uncertainty.
Turnover was 2.19 billion shares changing hands for $5.49 billion.
“The fact is that Australia is a very thin market and it always has been this way … we are spectating, like sitting on the dock of the bay, watching the tide come in and go out,” he said.
All sectors had lost ground at the close, with about six out of ten stocks falling.
Gold rose two per cent on Monday and was on track for its first three-day winning streak in a month, as bullion appeared to have regained its safe haven status against global economic uncertainty.
The spot price of gold in Sydney was $US1,663.4 per fine ounce, up $US29.52 from Monday’s close of $US1,633.88.
Gold stocks were among the only green spots on the market, with Australia’s biggest gold miner Newcrest up 34 cents, or one per cent, at $33.90 and Kingsgate rising 18 cents, or 2.6 per cent, to $7.06.
Telecoms were hit hardest at the close, down 1.2 per cent, despite being the outperforming sector for most of the day. Telstra fell four cents, or 1.3 per cent, to $3.00.
All the major retail banks ended lower, except ANZ, which rose four cents to $18.98.
The December share price futures index (SPI) fell eight points to 3,880 points, with 50,287 contracts traded.
