The S&P/ASX200 fell 50.9 points by midday on Tuesday, down 0.58 per cent, to 8,715.5, as the broader All Ordinaries lost 48 points, or 0.53 per cent, to 8,942.8.
Wall Street stalled at fresh record highs overnight as oil prices crept up on signals that the US was unlikely to accept an Iranian proposal to delay nuclear talks in order to prioritise the opening of the strait of Hormuz.
"Markets have been in limbo since President Trump formally cancelled the latest round of in-person negotiations over the weekend," Westpac economist Ryan Wells said.
"Price action has been mixed against this fluid backdrop around US-Iran negotiation prospects."
Energy and real estate were the only two sectors trading higher, scraping gains of less than 0.2 per cent.
Woodside and Santos traded either side of break-even, while refinery operators Viva Energy and Ampol both improved.
Dip-buyers supported uranium stocks after they started the week in the red, while Whitehaven outperformed other coal producers after targeting the upper end of 2026 earnings guidance in a quarterly update.
Utilities stocks underperformed, the segment tumbling almost three per cent as Origin extended its losses to almost a tenth in two sessions.
Origin's sell-off came after UBS analysts cut their earnings per share forecasts a day after the utility slashed its own revenue forecasts related to its stake in Octopus Energy.
The raw materials sector handed back Monday's gains with interest, shedding 1.2 per cent as BHP and Rio Tinto clocked even bigger losses.
Gold stocks also slipped as the precious metal eased to $US4,667 ($A6,501) an ounce.
Critical minerals producers PLS, Liontown and Lynas continued their recent strength with advances of up to three per cent.
The heavyweight financials sector traded roughly flat, as CBA, Westpac and NAB fell behind, while ANZ improved ahead of its interim results on Friday. CBA slipped 0.2 per cent to $173.49.
Consumer discretionary stocks were under pressure, dipping 1.1 per cent as Wesfarmers, Aristocrat Leisure and Light & Wonder weighed.
Health care stocks continued to sell off, wiping away Monday's gains to again trade at ten-year lows.
In company news, Domino's Pizza shares plummeted by nearly a tenth after a similar dive for its US-listed equivalent after a first-quarter earnings miss.
Beach Energy fell more than two per cent as March quarter production declined at its Otway Basin, Cooper Basin joint venture and Western Flank projects, despite its Perth Basin output soaring 174 per cent.
The Australian dollar was buying 71.78 US cents, up from 71.65 US cents on Monday at 5pm.
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