Stocks snap winning streak

An afternoon rally proved too weak to claw back early losses as the local bourse broke a five-session winning run.

The information boards at the ASX. (AAP Image/Dean Lewins)

The Australian sharemarket has broken a run of five straight positive sessions despite an afternoon rally predicated on the view Hillary Clinton won the first US presidential debate.

At the close, the benchmark S&P/ASX 200 index dipped 25.5 points, or 0.47 per cent, to 5,405.9, while the broader All Ordinaries index retreated 25.4 points, or 0.46 per cent, to 5,493.7.

The red session followed sharp falls in European trade as questions were again raised on the major banks in the region, with worries about the impact of fines on Deutsche Bank’s capital position at the heart of the worries.

Morgans, in a note to investors, said the activity may present a buying opportunity given the ebbs and flows seen since the financial crisis.

“We think that current market nerves will subside once the Fed’s intentions become clearer (regardless of whether it holds or hikes rates) in the wake of the September 21 FOMC meeting,” Morgans said.

“Current weakness therefore looks like another buying opportunity, as these episodes have proven to be several times since the GFC.”

Investors kept a close eye on the first debate between Hillary Clinton and Donald Trump, amid expectations a victory for the former would be well-received.

“What we should learn is how markets genuinely trade each candidate,” IG chief market strategist Chris Weston said of the debate.

It appears analysts were right to assume a Ms Clinton win would be favourable for markets, with the ASX seen bouncing 0.4 per cent off lows in the aftermath of a debate seen to favour the Democrat representative.

The banks drove the afternoon recovery, climbing upwards of 0.5 per cent off lows, although the big four still ended in the red.

NAB led its peers in only losing 0.2 per cent, while Westpac trailed with a 1.2 per cent retreat.

There was better news in retail as Wesfarmers gained 0.6 per cent after a price target upgrade from Morgan Stanley, although rival Woolworths stumbled 1.4 per cent.

A strong 3 per cent crude oil rally in overnight trade was not enough to push the energy sector higher, as prices retreated during the Asian session.

Santos ended down 1.1 per cent to $3.52, while Woodside weakened 1.6 per cent to $26.70 and Origin closed steady.

A mixed showing from base metals in offshore deals weighed on the big miners.

BHP Billiton softened 0.2 per cent to $21.50, Rio Tinto slipped 0.7 per cent to $50.01 and Fortescue skidded 1.4 per cent to $4.88.

Among other blue chips, Telstra gave back 1.5 per cent to $5.11, while Qantas lost 2.2 per cent to $3.17.

Elsewhere, Intueri plummeted 80 per cent as it sounded the alarm on its ability to continue to operate as a going concern and Flight Centre slumped 1.9 per cent after announcing a European acquisition.

Meanwhile, the Australian dollar surged US0.5c to US76.7c as the risk-on trade returned in the wake of the US debate.