The Australian sharemarket edged lower on Wednesday as investors took risk off the table ahead of a widely expected interest rate cut from the US Federal Reserve.

The benchmark S&P/ASX 200 closed down 4.6 points, or 0.1 per cent, at 8309.40 after rising earlier in the session. The All Ordinaries Index was flat at 8558.60.

While the Fed is expected to cut interest rates by another 25 basis points on Wednesday, the market will be focused on the central bank’s outlook for next year amid concerns Donald Trump’s return to the White House may rekindle inflation.

The outcome of the Fed’s last board meeting of the year could affect the extent of the recent “Santa rally”, said IG market analyst Tony Sycamore. The index recorded its best one-day session in a month on Tuesday.

“Today’s mixed market performance has prompted speculation about whether the Santa Claus rally did start,” he said.

“Historically, once the rally starts, momentum generally increases into the early weeks of January. We will likely need to wait for the outcomes of tomorrow’s Fed meeting to see more evidence of this.”

Investors took shelter in defensive industrial stocks which pushed the sector up 0.8 per cent. Banks and consumer discretionary stocks were the major detractors on the index.

Technology stocks with US exposure, meanwhile, climbed as traders looked favourably on the sector in light of the rate decision. Property management software provider SiteMinder rose 3.7 per cent to $6.52 and internet exchange services provider Megaport rallied 5.8 per cent to $8.33.

Trading in haven assets, including gold, steadied. Iron ore futures fell 1 per cent to $US103.55 a tonne, bitcoin moderated after topping $108,000 earlier in the session and the Australian dollar fell to a one-year low overnight to trade at US63.15¢.

Stocks in focus

On the ASX, Credit Corp Group posted the largest loss, tumbling 7.9 per cent at the close, to $15.17, followed by Insignia Financial. The financial services giant tumbled 4.2 per cent to $3.45 after it had rejected a takeover bid by US private equity house Bain Capital.

Shares in Omni Bridgeway leapt over 50 per cent in the session to close at $1.45 after it announced the sale of a portfolio of assets to private equity house Ares Management.

Clarity Pharmaceuticals jumped 12 per cent to $5.17, after the company revealed it had developed a product contributing to the diagnosis and treatment of cancer.

Vulcan Energy rose 1.9 per cent to $5.88 after the company signed a €879 million ($1.4 billion) loan commitment for the financing of the largest lithium resource in Europe.

And HMC Capital closed at $10.06 – up 0.4 per cent – holding on to its previous session gains. The stock slumped after DigiCo, in which HMC is a majority investor, listed to a lacklustre reception last week. DigiCo shares edged up 0.9 per cent to $4.65 on Wednesday.