The S&P/ASX 200 index fell 0.8% to 8,715, marking a fourth consecutive session of losses for Australian equities.
The decline was broad-based but led by the mining and banking sectors, which have been particularly sensitive to shifting risk sentiment.
Selling pressure intensified as investors reacted to escalating tensions in the Middle East.
Reports of heightened geopolitical risk, including comments from US President Donald Trump, contributed to a cautious mood across global markets.
The uncertainty has weighed heavily on commodity-linked stocks, with industrial metals and oil prices facing headwinds.
This latest drop follows a period of volatility for the benchmark index.