But the overall decline in the local bourse has mostly been a factor of overseas developments, said AMP Capital head of investment strategy Shane Oliver.

"It's hard to explain the weakness in Australia through the quarter on the basis of fundamentals," Mr Oliver said. In particular, February reporting season underlined a broad improvement in corporate profits, with around three quarters of companies reporting an increase in earnings versus a year ago. That was the strongest performance since before the GFC, Mr Oliver noted.

Instead, worries that climbing inflation would push the US central bank into tightening monetary policy faster than expected and threats of a trade war initiated by President Donald Trump conspired to depress sharemarket around the world.

Mr Oliver said he remains hopeful that solid earnings growth in Australia and abroad will help sharemarkets resume their upwards trend. He sticks to his year-end forecast of 6300 points for the ASX 200.

How the ASX moved on Thursday.

"At the end of the day corrections are normal. They can often be more than 10 per cent - and so far we are only down 6 per cent from the January high – but deep bear markets are normally associated with a recession in the Australia or US, and at the moment there's no sign of that."

Dwindling chances of a rate hike this year also failed to provide any meaningful support for the sharemarket.

On Thursday, HSBC Australia chief economist Paul Bloxham became the latest analyst to push back their expected timing for a lift in the Reserve Bank of Australia's (RBA) cash rate target, in this case from sometime in the third quarter of this year to the final quarter.


Lacklustre wages growth is the key factor behind the RBA's cautious monetary policy stance, Mr Bloxham wrote in a note to clients, and "this month brought more information which suggests that although wage growth is past its trough, the turnaround may be a bit slower than we had been expecting".

The RBA meets on Tuesday, but November now appears the most likely time for a rate hike, with market odds of a move jumping from virtually zero in the prior months to around 30 per cent, on JP Morgan numbers.

The Aussie dollar pushed as high as above US81 cents in late January before trending lower to fetch US76.6 cents.

What moved the market

Low growth

Australia remains a low growth market in a high growth region, concludes Credit Suisse equity strategist Hasan Tevfik. "We concede relatively sluggish growth can be a headwind in the near term but we find it has not been a major drag on market returns in the long term," he said. However, Australian companies have been successful in turning a weaker growth backdrop into stronger equity market returns, to their credit, so while growth is low, quality is high. Over the last 20 years, Australian and Asia ex-Japan equities have delivered similar market returns. Australian companies did it with 6 per cent nominal annual growth on average, "while Asia ex Japan could have squandered its faster growth backdrop".

The battler

The Australian dollar is down 2.1 per cent against the US dollar over the quarter, fetching US76.44¢ on Thursday. Meanwhile the trade weighted index value has fallen from 65.70 at the end January to 62.60, Westpac finds. Since late January, the US dollar index has held steady "despite considerable market volatility," Westpac chief economist Bill Evans writes. The Australian dollar's performance might suggest that foreign exchange markets are questioning the momentum behind global growth, as a slowing global environment will weigh on the Australian dollar and favour the US currency. "The positive lift in global growth in 2017 may be fading," Mr Evans argues.


Barrel roll

US crude oil stockpiles rose unexpectedly last week as imports soared, while gasoline and distillate inventories fell more than expected, the Energy Information Administration said on Wednesday. Crude inventories rose by 1.6 million barrels in the week to March 23, compared with analysts' expectations for a decrease of 287,000 barrels. Stocks at the Cushing, Oklahoma, delivery hub for U.S. crude futures rose by 1.8 million barrels. Net US crude imports rose last week by 1.1 million barrels per day. "It was a big import week, and they were up over a million barrels a day. So that's where you get your build from," said Bob Yawger, director of energy futures at Mizuho. Crude production also rose 26,000 bpd in the week, hitting a fresh record of 10.433 million bpd last week.

Stock watch: Medibank Private

Deutsche Bank is sticking to its "buy" recommendation on Medibank Private. The health insurer has expanded its trial of in-home rehabilitation services to 700 people from 350 people. The broker believes "the group has significant opportunity to expand its reach beyond its traditional private health insurance offering". Medibank spends an average of $8,700 for one patient to receive rehabilitation in hospital following knee or hip replacement. The in-home service costs the insurer $2,100, according to analyst Ross Curran. Deutsche Bank has a price target of $3.35 on Medibank stock, which is vulnerable to any regulatory changes or lift in competition. Shares of Medibank traded 0.3 per cent lower to $2.90 on Thursday.

With Reuters.