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Market closes lower on investor caution

The Australian sharemarket lost ground as hopes for US-led global reflation faded after the Group of 20 nations omitted a pledge to resist all forms of protectionism.

The S&P/ASX 200 index dropped 20.8 points, or 0.36 per cent, to 5778.9 with domestic stocks under pressure amid mounting concerns rampant east coast property speculation was increasing risks for the broader economy.

Australian Securities and Investments Commission Greg Medcraft admitted he had been concerned about a house price bubble “for a while”.

He said he was concerned that affordability had become stretched as Sydney and Melbourne house prices surged beyond the international long-term historic multiple of four times income.

“When people get a mortgage or a loan, they believe the bankers assess their ability to pay and it reassures them, even though they may have reservations about their true ability to pay,” he said.

The Australian dollar climbed US0.4¢ to US77.20¢ after the US dollar slipped on concerns implementation of US President Donald Trump’s fiscal spending and tax plans were being pushed well into next year.

The G20 meeting was a reminder that Mr Trump’s “America first” policies also posed negative risks.

“This turns the spotlight firmly on the formulation of US trade policy in coming weeks. It risks upsetting currently benign global risk sentiment,” National Australia Bank global head of currency strategy Ray Attrill said.

Government 10-year yields dropped 4.3 points to 2.818 per cent.

The Shanghai composite index was marginally firmer at the close of the ASX.

Spot iron ore lost 0.4 per cent to $US92.34 a tonne on Friday and Dalian futures were slightly firmer today.

CMC Markets chief market analyst Ric Spooner said the share market had “a down day”, with some retail stocks well in the red.

“The drivers are probably a bit of negativity from a slightly weaker US market, and probably domestic factors,” Mr Spooner said.

In the US on Friday, the Dow Jones Industrial Average fell 0.1 per cent and the S&P 500 lost 0.13 per cent as investors await details of US President Donald Trump’s promises of tax cuts.

Mr Spooner said some retailers were hit hard in the wake of reports on how much market share online retailing giant Amazon could take in Australia.

Electronics and homewares retailer Harvey Norman fell to its lowest level since July, 2016.

“The consumer and discretionary sectors have had a poor day, being driven, I think, by concerns about the impact that Amazon may have on some of the traditional bricks-and-mortar retailers, with news about Amazon’s improving market share,” Mr Spooner said

Harvey Norman slumped 39 cents, or 8.21 per cent, to $4.36.

Electronics retailer JB Hi-Fi lost 70 cents, or 2.8 per cent, to $23.99, and outdoor adventure gear retailer Kathmandu slipped 2.5 cents to $1.775.

The major mining and energy stocks were mixed.

Oil and gas producers Woodside and Santos lost ground on concerns about the global demand-supply balance for crude oil and pressure on local producers to firm supplies to the domestic market.

Global miner BHP Billiton lifted 0.16 per cent but Rio Tinto eased O.86 per cent.

Among the major banks, ANZ, Westpac and Commonwealth Bank were slightly weaker but National Australia Bank was firmer.

Share in SEEK rose 22 cents, or 1.49 per cent to $14.96 after the online jobs portal boosted its ownership of its online education joint venture with Swinburne University of Technology.

The broader All Ordinaries index was down 20.3 points, or 0.35 per cent to 5820.5 points.

The SPI200 futures contract was down 18 points, or 0.31 per cent, at 5765 points at 1.30pm.

National turnover was 2.7 billion securities traded worth $3.9 billion.

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