The S&P/ASX200 fell 75.5 points on Monday, down 0.84 per cent, to 8,882.8, as the broader All Ordinaries lost 81 points, or 0.87 per cent, to 9,183.3.
While investors had increasingly discounted US public trade announcements as negotiating tactics in recent months, China's call to initiate export controls on rare earths was different, Moomoo market strategist Michael McCarthy said.
"(Investors) can't do that this time around because it has come from the other side of the equation - it was China's moves on rare earths that have shifted the dial," he told AAP.Â
"China is not moving, and even if the US is calling, the phone's not being picked up at the moment."
Ten of 11 sectors traded lower, as IT stocks tumbled two per cent and a heavy financials sector (down 1.2 per cent) weighed on the bourse, while gold and rare earths miners found support.
ANZ was the only big four bank in the green on Monday, up 3.3 per cent to a ten-year high after unveiling a hefty $800 million cost-cutting plan.
NAB and CBA were the worst performers of the big four, dipping more than 1.8 per cent each.
The raw materials sector was one of the better performers, handing back 0.1 per cent as goldminers and rare earths plays helped offset weakness in BHP and mixed miners.
Safe haven flows helped spot gold smash through fresh peak of $US4,078 ($A6,250) an ounce, lifting local miners such as Northern Star (up 1.6 per cent) and Evolution (2.6 per cent).
Energy stocks tumbled 1.2 per cent, with broad sector losses as oil prices skidded to four-month lows following the US-China trade spat, but staged a small rebound during the ASX session.
Real estate was the only segment to notch a gain, but the 0.03 per cent lift was not much to write home about.
Health care stocks came under renewed pressure, led by slumps in Prod Medicus (down 5.6 per cent) and Cochlear (2.3 per cent) as high growth sectors sold off.
Consumer-facing companies also took a hit, with discretionaries and staples down 0.8 per cent and 0.9 per cent respectively.
In company news, Treasury Wine Estates tumbled more than 14 per cent after the Penfolds owner scrapped guidance due to tough trading conditions.
The Australian dollar is buying 65.24 US cents, down from 65.65 on Friday at 5pm.
Several major companies will hold annual general meetings this week, including Telstra, CBA, Origin Energy and Stockland.
On the macroeconomic front, the Reserve Bank will release its September meeting minutes on Tuesday and ABS labour force data will follow on Wednesday.
ON THE ASX:
* The S&P/ASX200 lost 75.5 points, or 0.84 per cent, to 8,882.8
* The broader All Ordinaries dropped 81 points, or 0.87 per cent, to 9,183.3
CURRENCY SNAPSHOT:
One Australian dollar trades for:
* 65.24 US cents, from 65.65 US cents on Friday
* 99.05 Japanese yen, from 100.33 Japanese yen
* 56.16 euro cents, from 56.75 euro cents
* 48.86 British pence, from 49.34 British pence
* 113.68 NZ cents, from 114.12 NZ cents
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