Across Asia, regional markets are all lower following a weaker-than-expected services sector report in the US and downgrades to US retailers. The Hang Seng is the worst performer, down 1.2% while the Kospi, Nikkei and Shanghai Composite are all lower between 0.1% and 0.6%.

In Australia, the ASX 200 finished 0.5% weaker at 4254.6 having traded as low as 4234.3. After seeing brief early gains, the market quickly ran out of puff and was on the back foot for most of the day. Weakness across the financials, industrials, energy and consumer sectors dragged the market south.

?Once again, we saw very fickle trade on light volumes today as the market drifted lower in line with other Asian markets. It looks like a few bulls that were caught long during the recent pullback sold into yesterday's strength.

The market seems a bit more bullish than what it was a few days ago. Nonetheless, everybody is waiting for positive signs to emerge from the upcoming US Q2 earnings season before they look to put money to work. The general feeling is that the recent sell-off may be overdone with many citing the 12.5 PE multiple the S&P 500 is trading on as evidence of this.

Should early Q2 results come in better-than-expected or inline, we could see a sharp move higher as expectations are re-rated across the board. However, until we're seeing 'actuals' rather than 'estimates', things are likely to remain a bit of a grind.

Turning our attention to the market and it was the consumer discretionary sector that led the majors lower. It fell 1.4% with the likes of Aristocrat Leisure, JB HiFi, Crown & Billabong International all down between 1.4% and 3.2%.

Boral was still halted today but in a note from Goldman Sachs JBWere, it was cut to hold from buy, with the broker saying the market is likely to be disappointed on several fronts following yesterday's news on a capital raising and investment plans. The broker believes the group's earnings upgrade was not as strong as expected and disappointing in light of Adelaide Brighton's recent upgrade. Goldman said the size and timing of the $490 million capital raising surprised, given the company does not seem to need funds immediately.

Energy names had a weak session too, with the sector giving up 1%. Oil Search was the worst performer, down 1.8% while Origin Energy, Whitehaven Coal, Macarthur Coal and Santos all weaker between 0.9% and 1.6%. Centennial Coal bucked the trend, adding 0.5%.

Financials were one of the major drags, closing 1% softer. Macquarie Group topped the decliners, finishing 2.2% lower while the big four banks gave up some of yesterday's gains, losing between 0.8% and 1.3%.

Reports suggesting ANZ Bank is no longer interested in Lone Star's 51% stake in Korea Exchange Bank may not come as a major surprise to investors. A report in South Korea's Financial News said, without citing sources, that ANZ has decided not to bid for the multi-billion dollar KEB stake, and a stake in Indonesia's Panin after conducting due diligence. ANZ had previously, and seriously, played down reports that it had bid for the KEB stake. ANZ spokesman declined to comment on the Financial News report. While investors are likely to welcome the news that it won't be spending billions of dollars in acquisitions, if correct, the report could raise questions about where the next leg of ANZ's Asian expansion drive could come from.

On the upside, the materials sector managed to the buck the broader trend, closing 0.2% firmer after strong overnight leads. Rio Tinto, Orica, BHP and Amcor were all among the gainers, up between 0.8% and 1.6%, with Amcor the best. Gold miners Lihir and Newcrest retreated following falls in the gold price, closing 1.9% and 2% weaker respectively.

In a report from Deutsche Bank, it said the Australian Government's reworked Minerals Resource Rent Tax is a big win for miners but still results in a small hit to valuations of BHP Billiton and Rio Tinto. Deutsche said the MRRT results in a 2.6% decline in net present value for BHP, while the decline for Rio is slightly more at 3.2% since it derives 85% of its operating profit from Australia compared with BHP's 55%. The broker also believes the big winners are those excluded from coverage by the reworked tax, like Energy Resources of Australia, Western Areas, Panoramic and Independence.

Ben Potter Research Analyst

IG Markets - CFD trading