The benchmark S&P/ASX200 fell 40.7 points on Thursday, down 0.46 per cent, to 8,885.5, as the broader All Ordinaries lost 39.9 points, or 0.43 per cent, to 9,178.9.
The continued drop cames as limited but positive tidbits of information from trade talks between US President Donald Trump and China's Xi Jinping offered few surprises and had been largely priced into markets, Pepperstone head of research Chris Weston said.
"We've had no real bounce from these headlines that are coming out from Trump and Xi's meeting," he told AAP.
"So it does look like it's an interest rate trade, taking in the tailwinds from yesterday's CPI print and the expectations for the market now that the RBA is pretty much done with rate cuts."
Seven of 11 local sectors finished the session lower as the consumer discretionary segment plummeted 4.2 per cent, while real estate plays (-2.3 per cent), tech stocks (-1.5 per cent) and communications (-1.8 per cent) also sold off.
Good news was hard to find, although energy companies offered some support and health care stocks rebounded 1.9 per cent to snap a six-session losing streak.
The slump in discretionaries was led by a more than seven per cent tumble in Wesfarmers shares.
Investors banished the group to nearly three-month lows as chair Michael Chaney lamented a Productivity Commission proposition of a five per cent cash flow tax at its annual meeting..
JB Hi-Fi took a 4.5 per cent hit despite a fairly strong quarterly update, amid stagnant sales growth for its Good Guys appliance stores.
The sell-off in real estate stocks was broad and unrelenting, as traders weighed a revised interest rate outlook, sending names like Stockland, Scentre Group and Dexus up to four per cent into the red.
The heavyweight financials sector was 0.2 per cent lower, as three of the big four banks edged upward but insurers and financials services groups broadly sold off.
The raw materials sector eked a 0.3 per cent lift in a mixed day for miners.
Large caps BHP and Rio Tinto traded roughly flat, while Fortescue rallied 2.7 per cent to $21.48, despite steady iron ore prices.
ASX-listed gold miners were trading either side of break-even as the precious metal found some buying support at $US3,969 ($A6,019) an ounce, still more than 10 per cent short of its recent record high.
Lithium producers Pilbara Minerals (+5.4 per cent) and Liontown Resources (+11.2 per cent) rocketed higher after investment giant JP Morgan upgraded its price outlook for spodumene to reflect increasing demand for electric vehicles.
Lynas has plummeted to six-week lows as US-China tensions over rare earths appeared to ease, slimming Lynas' eye-watering 2025 gains to a still very respectable 129 per cent.
James Hardie shares fell more than three per cent after shareholders voted chair Anne Lloyd and directors Rada Rodriguez and Peter-John Davis off the board following outrage over an unsanctioned takeover.
The Australian dollar is buying 65.92 US cents, down from 66.01 on Wednesday at 5pm, after the Aussie spiked on the back of lower interest rate cut expectations.
ON THE ASX:
* The S&P/ASX200 fell 40.7 points, or 0.46 per cent, to 8,885.5
* The broader All Ordinaries lost 39.9 points, or 0.43 per cent, to 9,178.9
CURRENCY SNAPSHOT:
One Australian dollar trades for:
* 65.92 US cents, from 66.01 US cents on Wednesday
* 100.88 Japanese yen, from 100.59 Japanese yen
* 56.70 euro cents, from 56.76 euro cents
* 49.89 British pence, from 49.87 British pence
* 113.98 NZ cents, from 114.16 NZ cents
