The benchmark S&P/ASX200 finished the day down 14 points, or 0.16 per cent, to 8,848.8, on Tuesday as the broader All Ordinaries slipped 12.6 points, or 0.14 per cent, to 9,135.9.
After a broadly positive session, the bourse slipped lower as the Reserve Bank held the cash interest rate at 3.6 per cent as expected, but its concerns about September quarter inflation trimmed hopes of a November rate cut.
"Now we're sort of not looking at a cut fully baked in until maybe after the first quarter of next year," Capital.com market analyst Kyle Rodda told AAP.
"We'll see how that goes, as obviously the quarterly consumer price index data is what they look at for an accurate read on what's really going on with prices, but nevertheless it's a cautious tone and it waters down the hopes for rate cuts."
Energy stocks led nine of 11 sectors into the red with a 1.6 per cent drop, while raw materials stocks counterbalanced broader weakness as record gold prices helped the segment notch a one per cent lift.
The precious metal is trading at $US3,864 an ounce after spiking above $US3,870 in the afternoon as concerns about a US government shutdown draw investors to the safe haven.
Supply concerns continued to support copper miners such as Capstone Copper (up 4.3 per cent) and Sandfire Resources, while lifting BHP (1.5 per cent) and Rio Tinto (0.6 per cent) despite iron futures slipping below $US103 a tonne.
The drop in energy stocks came as oil prices tumbled overnight after OPEC+ flagged production increases in November against a backdrop of a crude supply glut.
Woodside slipped 1.7 per cent to $23.03 and Santos tumbled 2.5 per cent to $6.73.
The heavyweight financials sector lost 0.5 per cent as three of the big four banks traded lower and Westpac eked a modest gain of less than 0.1 per cent.
Commonwealth Bank was heaviest, falling 0.9 per cent to $166.90, a 15 per cent discount to June's $192 record high.
Meanwhile, defence technology stock Droneshield outperformed the top-200 for a second straight session, surging 5.9 per cent higher to a fresh peak of $4.66.
Outside of the ASX 200, Seven West shares leapt more than seven per cent to 15 cents after it announced billionaire Kerry Stokes would step down as chair if a merger with Southern Cross Media was successful.Â
Telecommunications had a rough day, dropping a notable 0.9 per cent as Telstra shares tumbled 1.4 per cent to $4.82.
The Australian dollar is buying 65.99 US cents, up from 65.64 US cents on Monday at 5pm, the Aussie buoyed by the uplifted forecast for local interest rates.
Looking ahead, all eyes will be on US congress overnight as a potential government shutdown looms if deadlocked Republicans and Democrats can't strike a deal on short-term government funding.
A shutdown could potentially deprive investors of key economic data to assess the outlook for world's largest economy.
ON THE ASX:
* The S&P/ASX200 fell 14 points, or 0.16 per cent, to 8,848.8
* The broader All Ordinaries lost 12.6 points, or 0.14 per cent, to 9,135.9
CURRENCY SNAPSHOT:
One Australian dollar trades for:
* 65.99 US cents, from 65.64 US cents on Monday
* 97.72 Japanese yen, from 97.71 Japanese yen
* 56.22 euro cents, from 56.02 euro cents
* 49.10 British pence, from 48.86 British pence
* 113.83 NZ cents, from 113.44 NZ cents
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