The benchmark S&P/ASX200 index on Thursday finished 59.7 points lower at 8,748.7, a drop of 0.68 per cent, while the broader All Ordinaries fell 61 points, or 0.68 per cent, to 8,951.6.
The bourse got a bit of a bounce around midday after the Australian Bureau of Statistics reported better-than-expected jobs figures for May, but the momentum couldn't be sustained in afternoon trading.
The ASX200 finished trading as its lowest closing level in two weeks.
IG analyst Tony Sycamore said the selling pressure had been driven by two profit warnings - from Judo Capital and Worley - and a renewed slide in commodity prices, due to the surging US dollar.
The greenback has jumped to its highest level since May 2025, as measured against a basket of other currencies, amid bets the Federal Reserve will raise US interest rates later this year to combat inflation and limit fallout from the war.
Seven of the ASX's 11 sectors finished higher, and four closed lower, including the heavyweight mining sector.
The energy sector was the biggest loser, dropping 2.5 per cent as oil prices fell to their lowest level since the war on Iran began on February 28.
Brent crude was changing hands at $US72.80 as tankers carrying millions of barrels of crude oil exited the Strait of Hormuz following the US-Iran peace deal.
Woodside fell 2.9 per cent to $27.43, Santos retreated 2.8 per cent to $7.04 and Whitehaven Coal also dipped 2.9 per cent, to $7.98.
The materials/mining sector dropped 2.3 per cent as the ascent of the greenback put pressure on commodity prices.
BHP dropped 1.7 per cent to $58.52, Rio Tinto lost 2.3 per cent to $169.99 and Fortescue retreated 1.6 per cent to $18.94.
Goldminers fared even worse, with Evolution down 3.8 per cent and Northern Star dropping 3.3 per cent, as the yellow metal dropped under $US4,000 an ounce for the first time since November.
Mineral Resources fell 2.6 per cent to $64.14 as the mining services company said it would shutter its Lucky Bay mineral sands mine in regional WA, shedding 110 jobs, because of the conflict in the Middle East.
Health care was the biggest gainer, rising 2.6 per cent as companies that earn most of their money in US dollars gained ground, buoyed by the rallying greenback.
CSL added 2.3 per cent, Pro Medicus climbed 3.6 per cent and ResMed grew 4.6 per cent.
In the financial sector, NAB dropped 3.4 per cent to $37.45, Westpac fell 2.0 per cent to $35.06, ANZ dipped 2.2 per cent to $34.86 and CBA retreated 1.3 per cent to $162.70.
Judo Capital plunged 40.4 per cent to a two-year low of 92.5 cents after the business-focused bank said three troublesome loans had emerged in recent weeks.
Insurance companies had a good day, with IAG up 4.3 per cent, Medibank Private rising 2.7 per cent and Steadfast Group climbing 2.6 per cent.
Worley fell 9.7 per cent to $11.08 after the service provider to resource companies estimated that the Middle East conflict could impact its earnings by up to $60 million, even with the recent ceasefire.
"While there have been no project cancellations, customers continue to delay the commencement and award of new projects," Worley said.
The Australian dollar dropped to its lowest level since late April against its US counterpart, trading for 68.91 US cents, from 69.06 US cents at 5pm on Wednesday.
ON THE ASX:
* The S&P/ASX200 dropped 59.7 points, or 0.68 per cent, to 8,748.7
* The broader All Ordinaries fell 61 points, or 0.68 per cent, to 8,951.6
One Australian dollar trades for:
* 68.91 US cents, from 69.06 US cents at 5pm AEST on Wednesday
* 111.55 Japanese yen, from 111.67 Japanese yen
* 60.73 euro cents, from 60.79 euro cents
* 52.31 British pence, from 52.37 British pence
* 122.29 NZ cents, from 122.19 NZ cents
