Energy stocks (down 0.8 per cent), financials companies (down 0.5 per cent) and real estate investment trusts (REITS, down 0.9 per cent) weighed on the index. The big four banks, including the country’s biggest, CBA (down 0.6 per cent), slipped along with real estate companies Goodman Group (down 0.8 per cent), Charter Hall Group (down 1.9 per cent) and Vicinity Centres (down 1.8 per cent).

A 0.9 per cent drop in Brent crude oil prices dragged down heavyweights Woodside (down 0.6 per cent) and Santos (down 0.5 per cent). Coal miners Yancoal (down 0.6 per cent) and Whitehaven (down 1.3 per cent) also dropped.

The lowdown

EToro market analyst Josh Gilbert said there was little news to drive the Australian sharemarket on Tuesday as it had a muted session after a strong start to the week.

“The ASX really struggled for direction today given there was no lead from Wall Street overnight,” Gilbert said. “There wasn’t much economic data and while there was a bit of corporate news, there wasn’t much to move markets.”

Gilbert said investors were still digesting what’s ahead for the debt ceiling deal but that communication services companies were benefiting from the broader technology rally coming through from the US.

“The AI hype is really driving through to local markets,” he said, pointing to the Nasdaq – a technology-heavy index in the US – and its gains amid negotiations over the debt ceiling.

While Gilbert said, “markets haven’t really blinked” in the past two weeks as debt ceiling talks continue, he said general investor sentiment could decline. “Optimism may slowly begin to fade with the prospect of a rate hike from the Federal Reserve,” he said, noting that US personal consumption expenditure price index data recently came in higher than expected.

Elsewhere, European shares edged lower in light trade on Monday amid losses in technology and bank stocks, while investors assessed the tentative deal reached by US lawmakers to raise America’s debt ceiling and avert a default.

The pan-European STOXX 600 index closed 0.1 per cent lower after logging its strongest one-day gain in nearly two months on Friday. Markets in the United States, the UK and several European countries were closed on Monday.

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US President Joe Biden finalised a budget agreement with House Speaker Kevin McCarthy to suspend the $US31.4 trillion ($48 trillion) debt ceiling until January 1, 2025, and said the deal was ready to move to Congress for a vote.

“There’s some optimism of reaching agreement on the debt ceiling,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.

“But focus has returned to what’s going to happen given inflation is still stubborn, [there’s] worries about a hard landing in the US, and the impact of the European Central Bank’s expected rate hikes on eurozone economies,” she said.

Analysts also pointed out that the deal still has to pass votes in the House perhaps on Wednesday, and then the Senate. However, a clearer reaction will kick in when US and UK markets reopen.

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After rallying to multi-year highs on the back of an upbeat earnings season earlier in May, concerns about debt ceiling stand-off and signs of global economic slowdown have pressured European stocks of late. The benchmark STOXX 600 is on track to log its steepest monthly drop this year.

Spain’s IBEX slipped 0.1 per cent after Socialist Prime Minister Pedro Sanchez unexpectedly called a snap national election and his main rival spelled out the aim of becoming the country’s next leader, after left-wing parties were routed in a regional ballot.

Meanwhile, French Economy Minister Bruno Le Maire is in “very close discussions” with credit ratings agency Standard and Poor’s, which put France on notice in January for a possible downgrade, Prime Minister Elisabeth Borne noted.

France’s CAC 40 was down 0.2 per cent.

Elsewhere, Turkish President Tayyip Erdogan extended his two decades in power in elections on Sunday, winning a mandate to pursue increasingly authoritarian policies, which have polarised the country and strengthened its position as a regional military power.

Spain’s BBVA, among the European companies most exposed to Turkey, slipped 1.2 per cent, while Paris-listed Lyxor MSCI Turkey ETF added 1.8 per cent.

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“The company that committed these unacceptable, historic breaches is far removed from the company that exists today,” said Crown Resorts chief executive Ciaran Carruthers as the company braces to pay what could be one of the biggest financial penalties in corporate history after lodging a joint submission with the financial regulator to the Federal Court.

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With Reuters