The S&P/ASX200 fell 115.8 points by midday, down 1.27 per cent, to 8,928.5, as the broader All Ordinaries lost 131.8 points, or 1.42 per cent, to 9,150.
The move followed a sharp sell-off on Wall Street as another drop in metals revealed weaker global risk appetite, Moomoo dealing manager Chris Strazzeri said.
"Investors remain cautious over artificial intelligence, both the massive spending going into the sector and how AI will impact other businesses such as software," Mr Strazzeri said.
"We also saw the US banking sector fall more than two per cent, indicating investors are trimming exposure to both growth and financial sectors rather than rotating within the market."
Local tech stocks were hammered, the sector tumbling to lows not seen since November 2023, while basic materials, which have helped fuel the bourse's recent rally, dipped 2.5 per cent.
Eight of 11 local sectors were weaker by midday AEDT, as the traditionally defensive consumer staples and utilities pushed higher, along with a rebound for the recently under pressure real estate segment.
Local miners were a sea of red, with BHP, Rio Tino and Fortescue edging lower despite iron ore futures coiling at this week's ubiquitous $US100 a tonne level.
Copper prices haven't been so stable, retreating from recent highs and weighing on mixed miners like South32 which, along with pure copper plays Sandfire and Capstone, dropped around five per cent.
Gold producers sold off sharply as the precious metal slipped below $US5,000 an ounce for the first time since Tuesday to trade hands at $US4,934 ($A6,966) an ounce.
Local producers Northern Star and Evolution dropped around five per cent each, while Denver-headquartered Newmont faded 2.8 per cent.
The heavyweight financials sector dipped 0.8 per cent after trading near all-time highs on Thursday, following earnings beats from ANZ and CBA earlier this week.
On Friday, Westpac joined the fray when it announced December quarter cash earnings of $1.9 billion, about five per cent above expectations. There was no change to its consensus earnings outlook and the shares fell about 1.65 per cent to $40.32.
Energy stocks fell 1.9 per cent by lunchtime as oil prices dropped sharply and wiped days of steady upward consolidation, dragged lower by weaker risk sentiment.
Woodside and Santos each shed around two per cent, while coal producers and uranium stocks also sold off.
Health care stocks also took a hit, down 2.5 per cent as hearing device manufacturer Cochlear tanked 17 per cent after its interim bottom-line profit fell 21 per cent to $161.5 million.
The price drop wiped roughly $2.5 billion from Cochlear's $16.1 billion market cap.
In more earnings news, furniture trader Nick Scali tumbled 18 per cent to $19.47 despite beating first-half profit guidance, as local market sales growth undershot expectations.
Shipbuilder Austal sunk even deeper, its shares falling by almost a quarter after admitting an accounting mistake had overstated its 2026 earnings guidance by around 17 per cent.
The Australian dollar was buying 70.85 US cents, down from 71.24 US cents on Thursday at 5pm.
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