An onslaught of news saw the benchmark index start the week on the back foot, as investors digested mixed economic data, negative sentiment in Europe and a surprise resignation in New Zealand.
Shares around the region were sold off as Italian Prime Minister Matteo Renzi's resignation in response to his defeat in a constitutional referendum sent the euro tumbling and increased fears of emboldened nationalist movements around the world.
Local investors sold off the big four banks and health care stocks, while gains in utilities and miners prevented steeper losses. The Aussie dollar jumped 0.4 per cent against the New Zealand currency, after Prime Minister John Key surprised investors by announcing his retirement.
The benchmark S&P;/ASX 200 Index and the broader All Ordinaries Index each slid 0.7 per cent to 5400.4 points and 5458 points, respectively.
"The slide in the euro reflects the view there is a heightened risk for further instability in the region," said Andrew Mitchell, portfolio manager at Ophir Asset Management.
"Unlike Brexit, the pre-polls actually got it right this time and the market was at least somewhat prepared for Renzi's resignation."
Iron ore future rose 4.5 per cent in afternoon trade on Monday, helping to send both BHP Billiton and Rio Tinto managed to edge higher, with Fortescue Metals bumping up 1.9 per cent.
Commonwealth Bank of Australia fell 1 per cent, Westpac slid 0.9 per cent, ANZ was down 0.9 per cent and National Australia Bank was off 0.9 per cent.
While there was broad-based selling, investors weren't rushing into defensive assets at such a rate to indicate serious concern.
Oil consolidated its gains from Friday and traded largely sideways on Monday. Following last week's OPEC production cut deal, investors are in a holding pattern, awaiting new information.
In other equities news, shares in DUET Group hit all-time highs on receipt of an unsolicited but well-priced bid from a Chinese buyer. Cheung Kong Infrastructure has offered a $7.3 billion cash bid for the company, paying about 1.5 times the regulated asset base of DUET. Investors were extremely pleased with the deal sending the share price rocketing up 16.6 per cent and closed at $2.74.
Bellamy's continued its miserable sell off, with investors pushing the stock down a further 4.2 per cent to $6.56 on Monday. The selloff came after Friday's shock 43.5 per cent drop as investors re-evaluate the baby infant formula's prospects in China.
"Lower quality companies are continuing to outperform in terms of share price, but investors have to be careful – companies that miss the markets earnings expectations are being punished," said Mr Mitchell.
Stock Watch - Bapcor
Shares in automotive parts supplier Bapcor rose 1.8 per cent during Monday's session as it announced an increased offer of NZ$3.60 per share for its Kiwi counterpart Hellaby Holdings. Bapcor made an initial offer in September of NZ$3.30, however Hellaby's board urged shareholders to reject the offer, arguing than an independent assessment valued the shares between NZ$3.60 and NZ$4.12. Hellaby's board also rejected the latest offer, demanding a dividend payment that would use up imputation credits which would otherwise be lost. The stock closed at $4.99. Hellaby's largest shareholder, Castle Investments, said that Bapcor's offer was "compelling" and that Hellaby's independent valuation had overstated the company's prospects and omitted certain costs.
Market movers
The euro
The euro slid to a 20-month low on Monday following the resignation of Italian Prime Minister Renzi after his defeat in the referendum on constitutional reform. The single currency dived more than a cent to as low as $US1.0505, while the Australian dollar pushed back above 70 euro cents. The fall in the euro sparked talk the single currency could soon hit parity with the greenback for the first time since 2002. But for the time being, and in thin volumes, the euro managed to claw its way back to $US1.0558 in late local trade.
Gold
As uncertainty gripped Europe, gold made a bid for its first back-to-back gain, before falling back to fetch around $US1176 an ounce at the local sharemarket close. The metal rose as much as 0.95 per cent in early trad before sliding 1.28 per cent. The metal rose 0.5 per cent on Friday after three days of losses, and is 11 per cent higher this year. Political uncertainty, one of the dominant themes of the year, has seen the gold price swing wildly; soaring higher after the Brexit vote and then tumbling as Donald Trump won the United States election, triggering spikes in global bond yields.
Job ads
The number of job advertisements continued to rise in September, offering some good news for the Reserve Bank ahead of its December board meeting on Tuesday. ANZ head of Australian economics Felicity Emmett said the rise in job ads was "encouraging" given the recent softness in the employment data. "Although the pace of improvement in the labour market has slowed, conditions remain supportive of ongoing recovery," she said. The RBA has voiced concerns about slowing growth in the labour market, a topic likely to be discussed at its monetary policy meeting
Mixed data
Two key GDP components were released on Monday: company profits and business inventories. While profits grew by just 1 per cent in the September quarter, disappointing expectations of a 3.0 per cent rise, a 0.8 per cent increase in inventories was more than double the expected consensus gain and should add 0.2 percentage points to third-quarter GDP, due on Wednesday. Expectations are for quarterly growth to come in at 0.2 per cent, with some bearish economists predicting a quarterly contraction.