The S&P/ASX200 lost 45 points by midday on Tuesday, to be down 0.52 per cent to 8,580.1, as the broader All Ordinaries fell 55 points, or 0.62 per cent, to 8,800.9.
"A much stronger-than-expected US non-farm payrolls result on Friday unsettled financial markets, prompting investors to sharply reprice the Fed's policy path," Westpac Group economist Mantas Vanagas said.
The basic materials sector dropped by almost three per cent, as gold slumped to 11-week lows near $US4,270 ($A6,059) an ounce at the prospect of higher US interest rates and a stronger greenback.
Mega cap miners BHP, Rio Tinto and Fortescue each fell more than 2.2 per cent, tracking with recent dips in irone ore and copper futures.
Woodside and Santos improved as Brent crude hovered near $US94 a barrel, still coiling within the recent fortnight's range despite a short-lived resumption of strikes between Iran and Israel over the weekend.
Oil prices remain elevated, up more than 28 per cent since the Persian Gulf conflict began, but significantly short of recent peaks of around $US114 a barrel.
The heavyweight financials segment fell about 0.2 per cent, with all four big banks in the red and dragging on an otherwise broadly positive morning for the sector.
Traditionally defensive consumer staples outperformed the market as investors sought shelter from ongoing uncertainty, up 1.5 per cent on Monday with strong leads from Coles and Woolworths.
The health care sector was also attracting buyers, up 1.3 per cent and with plenty of room to move after losing almost half of its value since August last year.
Consumer discretionary stocks rose 0.8 per cent in a strong broad-sector performance led by Super Retail, Harvey Norman and Eagers Automotive, which charged 3.5 per cent higher as it flagged plans to extend its buyback program.
The move came as the Westpac-Melbourne Institute consumer sentiment index fell back towards April lows, as fears about the energy crisis and family finances weighed.
oOh!media shares surged more than seven per cent after exiting a trading halt, confirming it had received conditional and non-binding takeover offers from Bain Capital and other financial sponsors, in competition with an existing offer from Pacific Equity Partners and I Squared Capital.
Nine Entertainment is offloading its youth publisher Pedestrian to Vinyl Group, a week after completing the conversion of its regional TV assets to be owned and operated by WIN Network.
The Australian dollar was buying 70.58 US cents, down from 71.25 US cents on Friday at 5pm, after the greenback strengthened against major currencies at the prospect of a Fed rate hike in 2026.
