The benchmark S&P/ASX200 fell 46.1 points, or 0.52 per cent, to 8,803.5 on Tuesday, as the broader All Ordinaries slipped 46.2 points, or 0.51 per cent, to 9,080.7.
The historically weak market month of September was so far living up to its reputation, CommSec market analyst Steven Daghian said.
"But of course, perspective is important here," he told AAP.
"It follows 10 record highs in August, five months of gains so it's normal to see markets take a bit of a pause at these levels."
Several companies went ex-dividend on Tuesday, encouraging sell-downs of CSL (-1.6 per cent), BlueScope Steel (-1.9 per cent), Medibank (-0.6 per cent), and Brambles (-1.8 per cent), while Regis Healthcare bucked the trend with a 1.3 per cent lift.
Roughly $700 million will be paid back to shareholders this week, only a small chunk of the tens of billions of dollars to be handed back by mid-October.
News Corp lost 1.4 per cent to $50.26 as it not only went ex-dividend, but announced the settlement of the Murdoch family succession dispute, which will put Lachlan Murdoch in control of the media empire via a $5 billion share deal between Rupert and his other children.
Eight of 11 local sectors finished the day lower as financials (-0.7 per cent), materials (-0.4 per cent) and energy stocks (-1.0 per cent) weighed on the bourse.
All big four banks were in the red, with Commonwealth Bank leading the losses with a 1.3 per cent slip to $166.08, followed by Westpac, which fell 0.8 per cent after Morgan Stanley labelled it its "least preferred" bank.
ANZ edged 0.2 per cent lower to $32.88 after flagging plans to cut more than 3000 jobs.
BHP fell one per cent after the miner settled a class action, agreeing to pay $110 million to Australian shareholders who bought shares leading up to the 2015 Fundão dam failure in Brazil.
Spot gold reached a fresh high of $US3,659 ($A5,538) an ounce as the precious metal rallied on narrowing bets of a US Federal Reserve rate cut in September.
ASX-listed gold miners generally traded higher and are in their sixth-straight week of gains, with Sydney-headquartered Evolution Mining a standout, up 2.1 per cent on Tuesday to $9.12.
IT stocks and consumer discretionary shares also offered glimmers of hope on an otherwise dreary day, up 0.4 per cent and 0.3 per cent, as Australian tech tracked with a strong overnight Nasdaq session and as Wesfarmers and JB Hi-Fi led consumer stocks higher.
The Australian dollar has broken above 66 US cents for the first time since July 24, buying 66.05 US cents, up from 65.76 US cents at 5pm on Monday.
ON THE ASX:
* The S&P/ASX200 slipped 46.1 points on Tuesday, or 0.52 per cent, to 8.803.5
* The broader All Ordinaries fell 46.2 points, or 0.51 per cent, to 9.080.7
CURRENCY SNAPSHOT:
One Australian dollar buys:
* 66.05 US cents, from 65.76 US cents on Monday
* 97.13 Japanese yen, from 97.20 Japanese yen
* 56.15 euro cents, from 56.08 euro cents
* 48.69 British pence, from 48.86 British pence
* 111.07 NZ cents, from 111.16 NZ cents
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