Another record close on Wall Street didn't help the local sharemarket, as investors took profits in the big banks and sold off property stocks.

A rebound in US tech stocks from sudden falls earlier this month as well as a strong session for financials following a rise in bond yields led the Dow Jones and S&P 500 indices to all-time highs on Monday night.

Local investors shunned the party, however, driving the benchmark S&P/ASX 200 index down 0.8 per cent to close at the day's low of 5757.3 points.

Leading the market lower were the big four banks, with Westpac dropping 1.8 per cent, ANZ Bank losing 1.3 per cent, NAB falling 1.1 per cent and Commonwealth Bank down 0.7 per cent.

The falls came after Moody's downgraded their credit ratings, pointing at record personal debt and uncertainty around how households will react in an economic downturn.

But analysts said the impact on earnings was negligible as the downgrade brought Moody's ratings in line with those of rival rating agencies Standard and Poor's and Fitch, with few implications for funding costs.

Even if the ratings were downgraded by another notch, it would affect margins only by about one basis point, said Regal Funds Management senior analyst Omkar Joshi.

"I think the banks are down today simply because they've had a strong bounce over the last week and needed a breather," he said.

Property stocks took a hit, sliding 2.1 per cent after Morgan Stanley warned the sector is facing a combination of severe consumer slowdown and structural pressure from e-commerce.

It said it expected this slowdown to accelerate pressure on retailer margins, and reduce demand for physical space.

The broker downgraded Scentre Group and GPT Group to 'underweight' and cut their price targets by 10 per cent, sparking a 2.7 per cent slide in the former, while GPT lost 2.1 per cent.

Other yield-sensitive sectors such as utilities and telcos also posted losses, falling 1.1 per cent and 0.6 per cent respectively, after global bond yields rose overnight following some optimistic comments on the US economy by influential Federal Reserve Bank of New York president William Dudley.

Among the day's biggest winners was Tatts after the Australian Competition Tribunal waved through the proposed $11 billion merger with gaming rival Tabcorp. Tatts rallied 3.6 per cent, while Tabcorp added a more measured 0.4 per cent.

Shares in iSentia jumped nearly 5 per cent on reports that the struggling content marketing firm has been approached by a would-be suitor.

Stock watch: Air New Zealand

It's not only Qantas flying high: Air New Zealand shares climbed 1.3 per cent to hit $3.10 - an 18-year high - after the airline said that its passenger numbers had grown in May. Thanks to a Kiwi tourism boom, passenger numbers rose 8.7 per cent to 1.16 million in May compared with the same month a year earlier. Air NZ also said that the decline in a key revenue measure had moderated. "Revenue per available seat kilometre" fell 6.8 per cent after the impact of the currency exchange rate was removed, an improvement on a 7.5 per cent fall the previous month and reflecting an ebbing in intense competition. "The trend in recent months [is] a lot more positive than it was at the start of the year or late last year," Forsyth Barr analyst Andy Bowley said.

MARKET MOVERS

RBA minutes

Economists and currency traders were largely unmoved after the Reserve Bank of Australia released the minutes from its latest board meeting, at which it kept the cash rate unchanged at 1.5 per cent. RBA members struck a predictably upbeat tone on the economy, but the minutes show they continue to fret over low wage growth and extremely high household debt levels. They spent time discussing the role of regulators in reining in financial risks.

Goldilocks, no bears

The global equity bull market rolled on, buoyed this time by Monday night comments from a US Federal Reserve board member which struck the right mix of upbeat assessment of the economy and a cautious approach to lifting rates. Wall St hit new highs and tech stocks rallied after Federal Reserve Bank of New York president William Dudley expressed confidence that the Fed would reach its long-elusive inflation target of 2 per cent.

Chinese shares

Chinese stocks barely moved on Tuesday as investors awaited a historic decision by index provider MSCI on whether to add mainland shares to its emerging markets index. Many investors predict that the so-called A-shares which make up the majority of China's stock market will be included by MSCI. China's fourth attempt at cracking into the benchmark share indexes comes with its best chance of success. But the build-up to Wednesday morning's decision has been subdued.

100 years of repayments

Argentina wowed global investors with its 100-year bond, selling $US2.75 billion of the hotly demanded paper, just over a year after emerging from its latest default. The South American country received $US9.75 billion in orders for the bond, as yield-starved investors eyed an interest rate of 7.9 per cent. The country was effectively locked out of the capital markets for nearly 15 years amid a default and an ugly fight with its creditors, Argentina has since come to the international markets six times.