An afternoon rally led by a recovery in the banks and some better than expected Chinese industrial profit numbers was not enough to lift Australian shares into the black, as worries about falling iron ore and oil prices weighed on stock valuations.
The benchmark S&P/ASX 200 Index slipped 0.1 per cent to 5452.6 points on Tuesday, while the broader All Ordinaries Index lost 0.2 per cent to 5434 points. Annual general meeting season provided a slew of company updates.
Local shares took a week lead from offshore. In the United States on Monday night the S&P 500 Index closed down, while major markets across Europe were lower following the release of some disappointing economic data in Germany and after banks which failed the European Central Bank's Asset Quality Review and Stress Tests sold off heavily.
Investors are waiting on the outcome and commentary form the US Federal Reserve's Open Market Committee meeting that concludes on Thursday morning, local time.
In China on Tuesday, industrial profits for September grew by 0.4 per cent year-on-year, which helped buoy Chinese shares but did little for the sentiment toward local resource exporters.
Mining giant BHP Billiton dragged the index under as it fell 1.5 per cent to $33.32. In London on Monday night the company unveiled plans to sell US shale assets. Gas prices are under pressure from a 25 per cent slump in global oil prices over the past five months and Goldman Sachs slashed its 2015 price targets for the fuel.
When the ASX closed the spot price for iron ore, landed in China, was down 1.2 per cent at $US79.52 a tonne with futures trading tipping another fall overnight. Rio Tinto slipped 1.3 per cent to $59.03.
"As US oil production continues to increase there is some panic in the market that if the Organisation of Petroleum Exporting Countries doesn't vote to cut production at their November meeting that the global supply glut will worsen," Alphinity Asset Management portfolio manager Stephane Andre said.
Energy was the worst-performing sector on Tuesday, down 1.6 per cent, as Brent crude oil fell 0.5 per cent to $US85.68 a barrel. Australia's biggest oil producer Woodside Petroleum dropped 1.5 per cent to $39.54, while Santos lost 0.9 per cent to $12.82.
"Oil stocks have sold off heavily in recent months but investors should remain cautious of energy producers that still have high capital expenditure ahead of them, or companies like Santos and Origin Energy that have gone over budget on big projects," Pengana Global Resources Fund portfolio manager Ric Ronge said.
WorleyParsons dropped 2.7 per cent to $13.25 as the AGM heard of continued difficult conditions.
Whitehaven Coal fell 0.7 per cent to $1.52 as boss Paul Flynn addressed the AGM with plans to ramp up exports to China.
The major banks recovered from early losses ahead of National Australia Bank kicking off bank reporting season on Thursday. NAB added 0.2 per cent to $34.60.
Commonwealth Bank of Australia rose 0.2 per cent to $80.19, while Westpac Banking Corporation rose 1 per cent to $34.89. ANZ Banking Group lifted 0.2 per cent to $33.41 having emerged from Monday's brief trading halt that was prompted by a glitch.
Among other blue-chip stocks Telstra Corporation added 0.2 per cent at $5.55, Woolworths gained 0.3 per cent to $35.29, and Wesfarmers, owner of Coles, dipped 0.1 per cent to $43.02.
Healthcare was the strongest sector, as vaccine maker CSL added 1.4 per cent to $77.38 as a slew of analysts confirmed "buy" ratings following Monday's news the company has done a deal to become the second largest flu vaccine provider in the world.
Gold explorer Beadell Resources was the worst-performer, dropping 14.1 per cent to 27.5¢.
