The benchmark S&P/ASX200 index on Monday finished down 28.9 points, or 0.35 per cent, to 8,266.2 while the broader All Ordinaries fell 33.7 points, or 0.39 per cent, to 8,518.9.
Materials stocks followed commodity prices sharply lower after the Chinese government's announcement of a $A2.1 trillion debt swap scheme to help kickstart its stalling economy failed to impress.
An underwhelming support package for the Chinese economy announced by the People's Congress Standing Committee on Friday brought an end to the Australian market's best weekly rally since August.
The 10 trillion yuan ($A2.1 trillion) debt swap scheme will help local authorities remove "hidden" off-balance-sheet debt and save them hundreds of billions of dollars in interest payments over five years.
But it had already been widely mooted and contained no additional stimulus.
"The measures announced by China look more like an effort to repair government balance sheets rather than stimulate the economy directly, watering down hopes of a robust recovery," Capital.com senior financial market analyst Kyle Rodda said.
This disappointed commodities traders, who had been hoping for a bigger response from Beijing to the potential economic hit if US president-elect Donald Trump follows through on his threatened 60 per cent tariffs.
Crude oil, copper and iron ore all slumped more than two per cent.
Nevertheless, further support is expected with Finance Minister Lan Fo'an promising "more forceful" stimulus measures in 2025.
China was likely keeping its powder dry so it could respond in a more targeted fashion if and when the US trade blow eventuates, Pepperstone head of research Chris Weston said.
The materials sector, which relies heavily on Chinese exports, fell 2.8 per cent, outweighing growth in seven of the other 10 ASX industrial sectors.
BHP was 4.1 per cent lower, Rio Tinto retreated 3.1 per cent and Fortescue plummeted 7.3 per cent.
Goldminer Resolute Mining lost almost a third of its value after the company confirmed its CEO Terry Holohan and two other employees were taken captive by the military junta in charge of the African nation of Mali, where Resolute has an 80 per cent stake in the Syama Gold Mine.
The executives were in the capital Bamako holding discussions with mining and tax authorities about "unsubstantiated" claims against Resolute's business practices, the Perth-based company said in a statement.
"The company is continuing to work with the government on a resolution and will provide further updates on the situation as appropriate," Resolute said.
Financial stocks were mixed, with CBA and NAB gaining 0.3 and 0.8 per cent respectively, while Westpac fell 0.4 per cent and ANZ was basically flat.
Australia's biggest alcohol retailer, Endeavour Group, sank 4.9 per cent to an all-time low of $4.50 after first quarter trading figures came in below analyst expectations.
"After a positive start to the year, retail sales momentum slowed in September," chief executive Steve Donohue said.
Softer sales were compounded by downtrading from "value-conscious" customers, increased discounting, and ongoing inflationary pressures.
Fertiliser producer Incitec Pivot firmed 0.3 per cent after reporting $580 million in headline earnings for the 12 months ended September 30, slightly above consensus estimates.
The Australian dollar was buying 65.93 US cents, from 66.54 US cents at Friday's ASX close.
ON THE ASX:
* The benchmark S&P/ASX200 index finished Monday down 28.9 points, or 0.35 per cent, to 8,266.2.
* The broader All Ordinaries fell 33.7 points, or 0.39 per cent, to 8,518.9.
CURRENCY SNAPSHOT:
One Australian dollar buys:
* 65.93 US cents, from 66.54 US cents at Friday's ASX close
* 101.25 Japanese yen, from 101.63 Japanese yen
* 61.54 Euro cents, from 61.71 Euro cents
* 51.06 British pence, from 51.31 pence
* 110.36 NZ cents, from 110.69 NZ cents.
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