Expectations of an interest rate rise in the US weighed on local banking shares on Wednesday, offsetting gains from energy and materials stocks, which held the Australian share market flat.
The benchmark S&P/ASX200 index was up 6.4 points, or 0.10 per cent, at 6192.3 points on Wednesday, while the broader All Ordinaries index was 8.6 points, or 0.14 per cent, higher at 6307.7 points.
The focus on interest rates, as well as the ongoing royal commission, dragged on local financial stocks on Wednesday, down 0.63 per cent.
ANZ suffered the biggest losses, down 0.9 per cent to $27.96, and Westpac the least, down 0.3 per cent to $27.81.
BHP shares were up 1.2 per cent to $34.50, while Rio Tinto was 1.2 per cent higher at $80.03.
Meanwhile, the four-year high Brent crude reached this week has continued to boost energy stocks. Its sector was one of the strongest on the market, up 0.87 per cent.
In companies news, Nufarm has slumped to a $15.6 million full-year loss on the back of $91.5 million in drought-related impairments. The agricultural chemical supplier's shares last traded at $6.40 before entering a trading halt on Tuesday pending a capital raising.
US stocks were unable to extend gains as investors reduced their risk, following a widely expected interest rate hike by the Fed.
The Fed raised interest rates on Wednesday and left its monetary policy outlook for the coming years largely unchanged amid steady economic growth and a strong job market.
In a policy statement that marked the end of an era of "accommodative" monetary policy, Fed policymakers lifted the benchmark overnight lending rate by a quarter of a percentage point to a range of 2.00 per cent to 2.25 per cent.
The rate-sensitive S&P 500 financial index was 0.43 per cent lower, with bank shares down 0.58 per cent.
The S&P 500 utilities index and real estate index, also both sensitive to interest rates, were down 0.16 per cent and 0.06 per cent, respectively.
The Fed still foresees another rate hike in December, three more next year, and one increase in 2020. An eventual end to the Fed's current rate hike cycle would be viewed as good for stock investors.
The US stock market has enjoyed a boom period and is at record levels. But as rates rise, equities face rising competition for investors' funds not only from bonds, but also from cash, which is now the most attractive it has been in about a decade.
The Dow Jones Industrial Average was up 0.34 per cent at 26,582.16 points, while the S&P 500 gained 0.45 per cent to 2,928.75. The Nasdaq Composite added 0.68 per cent to 8,062.03.
The S&P 500 health index rose 0.88 per cent as biotechs led the gains, while the newly-formed communication services index rallied 1.06 per cent, boosted by Facebook, up 2.0 per cent.
Twenty-First Century Fox rose 1.5 per cent after agreeing to sell its stake in Sky to Comcast, which gained 0.83 per cent. Disney, which is buying Fox, jumped 1.86 per cent.
Nike fell 0.86 per cent as the sportswear maker stuck to its full-year forecast even after sales got a boost from a controversial ad campaign featuring former NFL player Colin Kaepernick.