The S&P/ASX200 slipped 6.4 points lower on Thursday, down 0.07 per cent to 8,927.5, as the broader All Ordinaries lost 13.7 points, or 0.15 per cent, to 9,236.9.
Fears of higher interest rates continued to weigh on the bourse after Wednesday's inflation surprise, dragging most rate-sensitive sectors into the red, while US threats of military intervention in Iran further dampened investor sentiment.
"The overarching concern here is the outlook for interest rates and the potential for the Reserve Bank to lift rates next week," Moomoo market strategist Michael McCarthy told AAP.
"Now, we have seen a bit of a turnaround in the market over the course of the trading day - in the first hour and a half, the market was belted and was down almost one per cent, but we've seen a bit of a scramble back since."
Only basic materials, energy stocks and consumer staples stocks ended the session clearly higher.
Raw materials overcame an early dip to outperform the other segments, as gold topped $US5,591 ($A7,887) an ounce, while Rio Tinto and BHP bounced late in the session after Beijing cut red tape for China's property developers.
Rare earths and battery minerals producers came under pressure, after the Trump administration flagged it might abandon a price floor for US critical minerals projects.
The bad news was compounded for mineral sands producer Iluka, which plummeted more than 10 per cent, after it flagged $565 million in pre-tax hits to its 2025 financial results.
Energy stocks rose 0.9 per cent as oil prices traded at four-month highs as the US threatened further military intervention in Iran over a new nuclear weapons deal.
Woodside and Santos edged higher, while coal producers broadly improved and uranium stocks' upward momentum continued.
The financial sector eased 0.3 per cent, with a mixed performance from the big four as CBA and Westpac lost ground, while NAB and ANZ advanced.
ASX-listed tech stocks made up the weakest sector with a 1.9 per cent slump, with WiseTech, Xero and Technology One all down two per cent or more.
Consumer discretionary stocks were also under pressure, slipping 0.8 per cent as investors repriced for likely higher incoming borrowing costs.
The Australian dollar is buying 70.87 US cents, up from 70.04 US cents on Wednesday at 5pm, soaring to three-year highs on greenback weakness, strong commodity prices, and narrowing odds of a Reserve Bank interest rate cut next week.
ON THE ASX:
* The S&P/ASX200 lost 6.4 points, or 0.07 per cent, to 8,927.5
* The broader All Ordinaries fell 13.7 points, or 0.15 per cent, to 9,236.9
CURRENCY SNAPSHOT:
One Australian dollar trades for:
* 70.87 US cents, from 70.04 US cents at 5pm AEDT on Wednesday
* 108.44 Japanese yen, from 106.94 Japanese yen
* 59.15 euro cents, from 58.38 euro cents
* 51.22 British pence, from 50.73 British pence
* 116.42 NZ cents, from 116.22 NZ cents
25°C