Coal and iron ore miners have dragged the Australian market lower, while Wall Street drifted into the red as the United States began its nationwide rollout of coronavirus vaccines.
By the close, the benchmark ASX 200 had slipped (-0.4pc) to 6,631. The broader All Ordinaries index was down by half a per cent to 6,866 points.
Despite the small losses, the share market is still trading near a nine-month high.
Coal stocks were the worst performers, including Coronado Global Resources (-10pc), Yancoal Australia (-8.4pc), New Hope Corporation (-2.7pc) and Whitehaven Coal (-5.9pc).
This was after Chinese state media reported that Beijing had blocked Australia’s coal imports, as relations between the two nations continue to sour.
Mining giants BHP (-2.3pc), Fortescue Metals (-3pc) and Rio Tinto (-1.3pc) also dragged the market lower.
The iron ore miners were weighed down by iron ore prices, which dropped (-3.9pc) to $US154.50 a tonne.
“Iron ore futures fell after Chinese steel mills called for authorities to step in and investigate the recent rally in prices,” ANZ economist Felicity Emmett said.
“China Iron & Steel Association called on the China Securities Regulatory Commission to crack down on illegal activities in the market.
“Nevertheless, the falls were contained by expectations of strong demand.”
In the past four weeks, iron ore prices have surged more than 30 per cent (to its highest value since 2013), largely due to strong Chinese demand for steel, and supply constraints in Brazil (a major iron ore exporter).
Meanwhile, some of the best performing stocks were KFC-franchise owner Collins Foods (+2.2pc), Xero (+2.5pc), Skycity (+2.3pc) and Shopping Centres Australasia (+3pc).
The Australian dollar was steady against the greenback, at 75.2 US cents.
But it fell to 56.4 pence, as the British currency jumped after the UK and European Union said they would extend the deadline for negotiations to avoid a “no-deal” Brexit.
“Even in the face of amped-up rhetoric, we continue to think a deal is the most plausible outcome,” said AXA Group chief economist Gilles Moec.
Australia’s labour market is recovering faster than expected thanks to an easing in coronavirus restrictions and a rebound in consumer spending, but it will still take years for unemployment to fall to desired levels, says the country’s central bank.
Unemployment is a “national priority” for the Reserve Bank of Australia, which held its December policy meeting on Tuesday.
The board feared a protracted period of unemployment lay ahead and agreed “substantial” monetary and fiscal support would be needed to boost employment and said it would add more stimulus if needed.
Minutes from the RBA meeting said members would “agreed to keep the size of the bond purchase program under review”.
The RBA board noted Chinese demand for Australian iron ore had remained firm even with Beijing slapping bans and tariffs on other imports such as wine and coal.
Eftpos, BPay and NPP Australia will merge, pending ACCC approval, to bolster its competitive edge against US credit giants Visa and Mastercard.
The companies say the merger will reduce payment costs, try to bring average merchant fees down further, and allow new payment features to quickly enter the market.
In a press release, Eftpos Australia said the three companies would remain distinct entities but be governed by a single board under the merger.
The popularity of tap-and-go payments and mobile banking features such as Google Pay, mean Visa and Mastercard have gained a considerable market in Australia.
A decision by the ACCC on the proposed merger is likely to be made by June.
Administration of the COVID-19 vaccine (developed by Pfizer and its German partner BioNTech) started on Monday local time in the United States, after the shot received emergency-use approval from US regulators last week.
Meanwhile, second waves of the pandemic have forced Germany, the Netherlands and London back into stricter lockdowns, while infections surged in Japan, Korean and parts of the US.
“The vaccine has and will likely continue to provide a tailwind to the market that is allowing investors to look beyond record case levels, hospitalisations and deaths,” analysts at JPMorgan said in a note.
The tech-heavy Nasdaq index lifted (+0.5pc) to 12,440 points.
But the S&P 500 finished modestly lower (-0.4pc) at 3,648, while the Dow Jones index slipped (-0.6pc) to 29,860 points.
Earlier in the day, the S&P rose nearly 1 per cent at its highest points, before wiping out all those gains.
However, the US benchmark index has surged (+14pc) to record highs in 2020, despite the pandemic, which has wrought economic devastation and killed more than a million people.
Alexion Pharmaceuticals was among the top boosts to the S&P and Nasdaq indices, surging 29.7 per cent, after British drugmaker AstraZeneca said it would buy the US biotech firm.
AstraZeneca’s US-listed shares fell 7.8 per cent.
“While the entire market is pleased, is optimistic, is bullish about the arrival of the vaccine this morning into the US, I think the average investor is realising that this rollout, this distribution of the vaccine is not going to be a silver bullet, is not going to go as fast as one hopes,” said Jake Dollarhide, chief executive officer of Longbow Asset Management in Oklahoma.
European markets closed with mixed results, as Britain’s FTSE fell (-0.2pc) to 6,532 and Germany’s DAX lifted (+.8pc) to 13,223.
Oil prices rose for six consecutive weeks as investors bet on a global economic recovery next year.
Brent crude futures rose (+0.6pc) to $US50.25 a barrel.