The benchmark S&P/ASX200 index on Monday finished down 39.9 points, or 0.5 per cent, to 7,931.7, its lowest finish since July 11. The broader All Ordinaries dropped 42.8 points, or 0.52 per cent, to 8,166.4.
Prediction markets were anticipating that Vice President Kamala Harris would be the US Democratic presidential nominee but would have an uphill battle against former president Donald Trump in the November 5 election.
Predict It gave Trump 61 per cent implied odds of victory, compared to Harris' 39 per cent.
Meanwhile, the fallout of Crowdstrike's cybersecurity gaffe, which had disrupted computer networks worldwide on Friday, was expected to take weeks to resolve.
In the Middle East, Israeli fighter jets struck an oil port in Yemen in retaliation for a drone attack in Tel Aviv, threatening to broaden the conflict.
The airstrikes were the first time Israel has attacked Yemen during the nine-month war.
Capital.com analyst Kyle Rodda said markets were being swept up in a reversal in risk sentiment happening across the globe, with miners and energy weighing after a pullback in commodity prices on Wall Street on Friday.
Nine of the ASX's 11 sectors finished in the red. The consumer staples sector, known as a safe haven, rose 0.7 per cent while consumer discretionaries gained marginally.
The energy sector was the biggest mover, dropping 1.6 per cent as Brent crude hovered near a five-week low of $US83 a barrel.
Woodside Energy dropped 2.1 per cent to $28.60 as Australia's largest oil and gas producer said it would spend $US900 million ($A1.4 billion) to acquire Tellurian, a US company with a fully permitted LNG project under development.
"The acquisition of Tellurian and its Driftwood LNG development opportunity positions Woodside to be a global LNG powerhouse," Woodside CEO Meg O'Neill said.
Santos dropped 0.9 per cent, Beach Energy retreated 2.6 per cent and coalminer Whitehaven Coal dropped 4.0 per cent.
In the heavyweight mining sector, South32 fell 12.6 per cent to a four-month low of $2.99 after the BHP spin-off missed 2023/24 production guidance for alumina and copper, while revising downward production targets for 2024/25.
Chief executive Graham Kerr said overall it was another quarter of improved operating performance.
BHP dipped 0.3 per cent to a year-and-a-half low of $41.64, while Fortescue retreated 0.5 per cent to $21.52 and Rio Tinto gained 0.4 per cent to $114.45.
The Big Four banks were mostly lower, with NAB down 0.9 per cent to $36.92, ANZ falling 0.7 per cent to $29.49 and Westpac finishing 0.5 per cent lower at $28.07.Â
CBA was the outlier, basically flat at $131.68, not far from last week's all-time closing high of $133.50.
Elsewhere, Droneshield dropped 20.9 per cent to a one-month low of $1.55 as the defence contractor reported first-half revenue of $24.1 million, more than double that from a year ago.
Investors were apparently hoping for better numbers given how Droneshield shares went parabolic this year.
They are still up 306 per cent year-to-date but fell 16.2 per cent last week.
The Australian dollar dropped to a three-week low after China cut several key interest rates, buying 66.64 US cents, from 67.00 US cents at Friday's ASX close.
ON THE ASX:
* The benchmark S&P/ASX200 index on Monday dropped 39.9 points, or 0.5 per cent, at 7,931.7.
* The broader All Ordinaries fell 42.8 points, or 0.52 per cent, to 8,166.4.
CURRENCY SNAPSHOT:
One Australian dollar buys:
* 66.64 US cents, from 67.00 US cents at Friday's ASX close
* 104.62 Japanese yen, from 105.71 Japanese yen
* 61.21 euro cents, from 61.55 euro cents
* 51.59 British pence, from 51.82 pence
* 111.17 NZ cents, from 111.08 NZ cents.
