The Australian share market clawed back some of its earlier losses but still closed lower on Tuesday on the back of investor concern over emerging markets.
Weakness in the resources sector and among the big banks weighed upon the local bourse.
IG market strategist Evan Lucas said the Australian market started trading quite poorly but came back quite nicely given that the futures market had been pointing to heavier losses.
“We probably have performed better than expected even though we are down,” Mr Lucas said.
“It gets back to nervousness around emerging markets.”
Mr Lucas said sharp currency movements, current account deficits and other economic woes in the likes of Turkey, Argentina and South Africa were generating some anxiety amongst investors.
Investors also were wondering how the slowing down in Chinese economic growth would affect markets such as South Korea, Malaysia and Thailand.
In addition, investors are awaiting the outcome of a US central bank meeting.
The chairman of the US Federal Reserve, Ben Bernanke, heads up his final policy meeting on Tuesday night (Australian time), and financial markets expect the Federal Open Market Committee to continue tapering its measures to stimulate the US economy.
Mr Lucas said there were bright spots in the local market on Tuesday, including JB Hi-Fi and Oil Search.
Home entertainment and electronics seller JB Hi-Fi surged 90 cents, or 4.92 per cent, to $19.19 after it said its first half profit grew by 10 per cent.
Oil and gas explorer and developer Oil Search rose 12 cents to $8.26 after it reported higher production and revenue numbers and lifted its production forecast.
Among the major banks, Commonwealth Bank dropped 61 cents to $74.13, ANZ dumped 51 cents at $30.14, National Australia Bank dipped 49 cents to $33.33, and Westpac descended 34 cents to $30.78.
In the resources sector, global miner BHP Billiton retreated 73 cents to $36.31, Rio Tinto reversed 85 cents to $64.31, and iron ore miner Fortescue Metals ejected eight cents at $5.15.
Building products maker Boral eased two cents to $4.70 as it said it expects strong profit growth for the first half of the financial year but flagged weaker earnings for the second half.
KEY FACTS
* At 1625 AEDT on Tuesday, the benchmark S&P/ASX200 index was down 65.8 points, or 1.26 per cent, at 5,175.1 points.
* The broader All Ordinaries index was off 66.3 points, or 1.26 per cent, at 5,188.0 points.
* The March share price index futures contract was 25 points lower at 5,132 points, with 36,196 contracts traded.
* National turnover was 1.85 billion securities worth $4.86 billion.
