The benchmark S&P/ASX200 index on Monday dropped 59.1 points, or 0.76 per cent, to 7,763.2, while the broader All Ordinaries fell 57.9 points, or 0.72 per cent, to 8,012.2.
The losses came as iron ore futures dropped to $US110 a tonne over the weekend, after hitting a one-month high of US$113 on Friday, as investors weighed whether increased demand from China was sustainable.
Oil prices had also eased after hitting a more than seven-week high of $US87 a barrel late last week as analysts watched the potential impact of Tropical Storm Beryl on oil and production and exports in the Gulf of Mexico.
But gold was trading at a seven-week high of $US2,380 an ounce after softening US labour market data released late Friday reinforced expectations the Fed would cut interest rates in September.
In Europe, France looked headed for a hung parliament and potentially an electoral stalemate with a coalition of left-wing parties surprisingly winning a majority of seats in the weekend poll.
While they did not gain an outright majority, the high-spending rhetoric of the coalition sent a nervous shiver down the spine of European businesses watching with interest.
Nine of the ASX's 11 sectors finished lower, with consumer discretionaries and tech both closing 0.3 per cent higher.
Materials was the biggest loser given the drop in iron ore prices.
BHP dropped 2.1 per cent to $43.48, Fortescue fell 2.6 per cent to $21.82 and Rio Tinto retreated 2.4 per cent to $119.90. Goldminer Newmont added 0.9 per cent to $65.51 and Evolution was up 2.5 per cent to $3.73.
Mid-tier goldminers Red5, Regis and Emeral Resources rose on production updates, climbing 5.5 per cent, 2.0 per cent and 4.1 per cent, respectively.
In the energy sector, Woodside dropped 1.8 per cent to $28.74, Santos retreated 2.1 per cent to $7.82 and Beach Energy dipped 1.3 per cent to $1.50.
But coalminers continued to gain ground following the June 29 explosion at Anglo American's Grosvenor mine in Queensland, which is expected to cause supply disruptions for months.
Whitehaven added 0.2 per cent to a fresh 18-month high of $8.99, Yancoal was up 1.2 per cent to a seven-year high of $7.42 and New Hope climbed 0.4 per cent to $5.04.
In the financial sector, the Big Four banks were mixed. ANZ added 0.2 per cent to $28.71, NAB was flat at $35.33, Westpac dipped 0.3 per cent to $27.13 and CBA fell 0.5 per cent to $126.47.
In small caps, Rex Minerals soared 56.4 per cent to a decade-high of 43c after the South Australia-based mineral exploration company agreed to be taken over by its largest shareholder, privately owned mining group MACH Metals, for 47c a share.
The deal values Rex at $393 million and will allow MACH to develop Rex's Hillside project, a "shovel-ready" planned copper-gold mine on South Australia's Yorke Peninsula.
Core Lithium grew 10 per cent to 10c after the lithium developer said it ended 2023/24 with $87.2 million in cash after suspending operations at its Finniss mine in the NT earlier in the year.
The Australian dollar was near a fresh six-month high against its US counterpart, buying 67.43 US cents, from 67.29 US cents at Friday's ASX close.
ON THE ASX:
* The benchmark S&P/ASX200 index finished Monday down 59.1 points, or 0.76 per cent, at 7,763.2
* The broader All Ordinaries dropped 57.9 points, or 0.72 per cent, to 8,012.2.
CURRENCY SNAPSHOT:
One Australian dollar buys:
* 67.43 US cents, from 67.29 US cents at Friday's ASX close
* 108.43 Japanese yen, from 108.19 Japanese yen
* 62.30 euro cents, from 62.19 euro cents
* 52.66 British pence, from 52.69 pence
* 109.82 NZ cents, from 1.10 NZ cents.
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