Goldminers also struggled amid a pullback in the price of the yellow metal, while insurance companies fell after opposition leader Peter Dutton accused them of price gouging and threatened to break them up if the Coalition wins power.
The S&P/ASX200 did recover a bit in late afternoon trading, finishing Monday on the highs of the day, down just 18.7 points, or 0.22 per cent, to 8,537.1. Three hours earlier the benchmark index had been down as much as 0.8 per cent.
The broader All Ordinaries on Monday dropped 13.2 points, or 0.15 per cent, to 8,811.9.
Capital.com analyst Kyle Rodda said that market participants were positioning themselves for Tuesday's Reserve Bank decision, with the money market giving 90 per cent implied odds of a rate cut.
Six of the ASX's 11 sectors finished higher on Monday and four closed lower, with tech basically flat.
The ASX's heavyweight financial sector fell 1.1 per cent, with Westpac dropping 4.1 per cent to a four-week low of $33.30 and Bendigo and Adelaide plunging 15.3 per cent to a nine-month low of $11.37 following their financial updates.
Westpac said its net profit after tax for the three months to December 31 was down nine per cent to $1.7 billion, which it attributed to hedge accounting that would reverse over time.
Bendigo and Adelaide meanwhile said it made $265.2 million in cash earnings in the six months to December 31, down 1.1 per cent from a year ago and down nine per cent from the previous quarter.
"Our earnings have been challenged both on the income and expense lines," chief executive and managing director Richard Fennell said.
The other big banks finished down as well, with NAB dropping 1.2 per cent to $40.52, ANZ falling 0.4 per cent to $31.16 and CBA dipping 0.3 per cent to $164.97.
Elsewhere in the financial sector, Suncorp Group dropped 7.2 per cent and IAG retreated 2.8 per cent after Mr Dutton floated the idea of extending the coalition's plan to carve up supermarkets into the insurance industry to stop consumers from getting "ripped off".
Meanwhile, gold had fallen to back below $US2,900, changing hands at a five-day low of $US2,895 ahead of the release of Federal Reserve minutes later this week.
Northern Star dropped 3.5 per cent, Newmont subtracted 2.8 per cent and Evolution retreated 2.1 per cent.
As for the iron ore giants, BHP dipped 0.3 per cent to $40.80, Fortescue fell 0.6 per cent to $19.41 and Rio Tinto lost 0.2 per cent at $120.94.
But Chalice Mining soared 22.9 per cent to a three-month high of $1.475 after the company announced copper-nickel testing results at its Gonneville project northeast of Perth.
Also, BlueScope Steel climbed 13.0 per cent to a three-year high of $25.25 after the steelmaker posted a first-half profit of $179.1 million, down by $260.2 million from a year ago.
In the consumer staples sector, A2Milk had rocketed 19.7 per cent to a six-month high of $7.12 after the Kiwi dairy company said it would pay its first-ever dividend after better-than-expected sales of infant formula in China.
In tech, Audinate soared 26.5 per cent to a four-month high of $9.59 after the professional audio-visual networking equipment company reported making a $US16 million gross profit in the first half.
The Australian dollar was at a fresh two-month high against its US counterpart, buying 63.67 US cents, from 63.23 US cents at 5pm on Friday.
ON THE ASX:
* The benchmark S&P/ASX200 index on Monday dropped 18.7 points, or 0.22 per cent, to 8,537.1
* The broader All Ordinaries fell 13.2 points, or 0.15 per cent, to 8,811.9
CURRENCY SNAPSHOT:
One Australian dollar buys:
* 63.67 US cents, from 63.23 US cents at 5pm AEDT on Friday
* 96.49 Japanese yen, from 96.48 yen
* 60.72 euro cents, from 60.46 euro cents
* 50.59 British pence, from 50.34 pence
* 111.17 NZ cents, from 111.17 NZ cents
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