The S&P/ASX200 shed 49 points by midday on Friday, down 0.58 per cent, to 8,448.8, as the broader All Ordinaries lost 52 points, or 0.6 per cent, to 8,638.7.
The top 200 index is now trading at its lowest level since November 24.
The continued slump followed a weak overnight session on Wall Street after tit-for-tat energy infrastructure attacks sent crude prices surging, while inflation worries drove hawkish pivots from multiple central banks, IG market analyst Tony Sycamore said.
"This shift has resulted in rates markets aggressively pricing out any chance of a Fed(eral Reserve) rate cut this year, while across the Atlantic, traders in the Euro Area and the UK are now bracing for multiple rate hikes in 2026," he said.
Oil prices remain elevated but have eased from Thursday's spike, after the US demanded Israel halt further strikes on critical Iranian infrastructure.
That came after Iranian retaliatory strikes knocked out 17 per cent of Qatar's LNG capacity for up to five years.
Local miners have been under continued pressure, with the basic materials sector down more than seven per cent this week.
The segment has fallen more than 21 per cent since its all-time high reached on March 2, putting it in a technical bear market.
Mega miners BHP, Rio Tinto and Fortescue weighed heavily, each down two per cent or more on Friday, while gold miners were broadly lower after getting hammered on Thursday.
Gold prices have slumped seven per cent this week to trade at $US4,654 ($A6,566) an ounce.
The picture outside of materials was significantly less grim, with five of 11 sectors trading higher and a further three flat.
The heavyweight financials segment was down 0.4 per cent as the major banks grinded lower after a positive start crumbled by midday.
NAB was the weakest of the big four, down 1.5 per cent to $45.92, while CommBank slipped 0.4 per cent to $176.72.
Premier Investments outperformed the S&P/ASX200, rising 4.4 per cent, after it grew interim revenue to $479.7 million, with earnings in line with guidance.
Energy stocks were relatively subdued on Friday, with Woodside about flat and Santos down 0.6 per cent, while coal producers advanced.
Uranium stocks were mixed after taking a hammering on Thursday, with Paladin eking a modest gain, Deep Yellow rebounding more than three per cent and Boss Energy 2.6 per cent lower.
In company news, shares of Telstra gained 0.3 per cent to $5.32 after appointing Holly Kramer to its board as a non-executive director, replacing Elana Rubin.
The Australian dollar was buying 70.83 US cents, up from 70.37 US cents on Thursday at 5pm, after local interest rate markets narrowed their bets on further interest rate hikes in 2026.
There are now 68 basis points of rate increases priced in for the remainder of the year, equating to three further hikes, which could leave the cash rate at 4.85 heading into 2027, compared to 4.10 per cent now.
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