The S&P/ASX200 fell 50.2 points on Thursday, down 0.57 per cent, to 8,793.4, as the broader All Ordinaries also dipped 50.2 points, or 0.55 per cent, to 9,024.2.
"There's pressure across the board, and it's clear that a deterioration and the geopolitical outlook is weighing not just on Australia's markets, but on Asia-Pacific markets generally," Moomoo market strategist Michael McCarthy told AAP.
These exchanges were diverging with Wall Street, where its three major indices notched record closes overnight, as US investors persistently shrug off the conflict.
"This is not sustainable. It must break one way or the other," Mr McCarthy said.
"In my view, the unsustainably high levels of the NASDAQ suggests that it's the one that's going to have to come back into line with the rest of the world."
Energy and utilities stocks were the only segments to move higher, lifting as oil prices gained 1.5 per cent over the session.
The heavyweight financials and raw materials sectors weighed heavily on the bourse as investor confidence deteriorated.
Mega miners BHP, Rio Tinto and Fortescue all traded lower, while gold stocks also broadly sold off as the precious metal eased to $US4,712 ($A6,588) an ounce.
Copper producers, battery minerals and rare earths stocks also lost ground.
Financials stocks dipped more than 0.7 per cent as all big four banks traded lower, along with major insurers and most investment firms.
Australia's health care sector plummeted to eight-year lows, after hearing device manufacturer Cochlear crumbled by more than 40 per cent in two sessions since slashing its 2026 earnings guidance on Wednesday.
Consumer-facing stocks came under pressure, with even the traditionally defensive staples segment dropping 0.8 per cent, while cyclicals fell by a similar degree.
In company news, Santos shares rocketed 3.6 per cent to $7.71 as its Barossa project helped boost quarterly production by three per cent.
Fellow fossil fuel giant Woodside gained more than three per cent, despite an eventful annual meeting disrupted by climate activists, where more than a third of shareholders voted against new boss Liz Westcott's remuneration plan.
The Australian dollar is buying 71.52 US cents, down from 71.73 US cents on Wednesday at 5pm, as safe-haven demand bolstered the greenback.
Looking ahead, investors are bracing for next week's March inflation print, which will be the first to capture the impact of the conflict's energy price shock.
"Headline inflation for March is expected to surge to 4.8 per cent year-on-year, while the RBA's preferred trimmed-mean is forecast to rise to 3.4 per cent," IG market analyst Tony Sycamore said.
"These numbers sit well above the midpoint of the RBA's two-to-three per cent target band — and that's before the sharp spike in petrol prices in March."
ON THE ASX:
* The S&P/ASX200 dropped 50.2 points, or 0.57 per cent, to 8,793.4.
* The broader All Ordinaries lost 50.2 points, or 0.55 per cent, to 9,024.2.
One Australian dollar trades for:
* 71.52 US cents, from 71.73 US cents at 5pm AEST on Wednesday.
* 114.19 Japanese yen, from 114.17 Japanese yen.
* 61.11 euro cents, from 61.04 euro cents.
* 53.01 British pence, from 53.05 British pence.
* 121.48 NZ cents, from 121.20 NZ cents
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