Australian stocks fell 116 points, or 1.3%, to 8,688 in Wednesday morning trade, extending losses for a third consecutive session and touching their lowest level in a week.
Sentiment weakened after a negative lead from Wall Street overnight, where a broad selloff in U.S. chipmakers reflected growing concerns over the sustainability of the AI-driven rally.
Investors also remained cautious ahead of China's June CPI and PPI data due later this week, with the readings expected to provide fresh clues on demand in Australia's largest trading partner.
Meanwhile, markets awaited the minutes of the Federal Reserve's June meeting for further guidance on the U.S. interest rate outlook.
Losses were broad-based, led by technology, materials, communication services, and financial stocks.
Mining heavyweight BHP Group dropped 2.9%, while Evolution Mining slid 3.8%, Telstra lost 3.1%, and Macquarie Group fell 2.4%.
The four major banks also traded lower, declining between 1.0% and 1.7%.