The S&P/ASX 200 started Tuesday’s session with a rise thanks to strong leads from Wall Street, where indices touched new record highs, but was soon dragged lower, particularly by the financial, healthcare, real estate, and industrial sectors. The ASX200 closed 0.9 per cent lower at 6821.2 points, a decline of 59.5 points. Futures pointed to a flat session in the US overnight.

Macquarie Group jumped 6.6 per cent and soaked up most of the money flowing into financial stocks while Suncorp gained 3 per cent after better than expected half-year results. The big four banks dragged the rest of the financial sector down. National Australia Bank down 1.7 per cent, ANZ down 1.9 per cent, and both Westpac and Commonwealth Bank down 1.3 per cent. Challenger fell 14.4 per cent to $6.18, the lowest it has been since Christmas Eve.

Among industrials James Hardie delivered a strong result and resumed dividends, it closed 1 per cent higher at $41.17, but Boral fell 7.4 per cent to $5.01.

Investment strategist at Nomura, Andrew Ticehurst, said stock markets around the world were running on a strong “re-flation theme”.

“There is a definite sense that this year is going to be a much better year than last year: Covid case numbers are starting to decline in large countries and vaccine rollout is proceeding, even if it’s a little bit slower than some people would want,” he said.

Governments continue to support economic expansion, especially the new US administration, and central banks had coordinated aggressive fiscal support that was pushing investors into higher growth and riskier assets.

“It’s a pretty powerful cocktail and as a result you have the US (market) up six days running,” Mr Ticehurst said. If the Biden administration’s stimulus package passed at more than $US1.5 trillion this could push markets even higher, he added.

“(And ) Australia’s economic data continues to impress. It is quite consistently beating consensus expectations and it looks like the economy is bouncing back quite sharply.”
Despite the energy sector falling 0.6 per cent, the rising oil price was a proxy for global economic growth.

“We are starting to see normality creep back in and this is definitely supporting oil demand,″⁣ Bell Direct market analyst Jessica Amir said, adding production cuts among OPEC members also put upwards pressure on prices.

China’s stock markets close on Wednesday afternoon for five sessions due to the Lunar New Year holiday, with some wondering if the pause in Chinese investing would lead to a decline in dual-listed Asian tech stocks like Alibaba.