Australian shares snapped a four-day winning streak on Monday, dragged down by commodity stocks as protests in several Chinese cities against strict COVID restrictions raised demand concerns.
The S&P/ASX 200 index ended 0.4% lower at 7,229.1, also weighed down by data showing a surprise fall in Australian retail sales.
Energy stocks were the top losers with a drop of 1.7% as the COVID protests in top crude oil importer China fuelled demand concerns.
The protests in China and surprise fall in Australian retail sales weighed on the risk appetite for ASX assets, said Hebe Chen, a market analyst at IG Markets.
Retail sales fell for the first time this year in October as rising prices and higher interest rates seemed to have an impact on spending.
"The time has arrived for the RBA (Reserve Bank of Australia) to re-think about the monetary policy ahead, as it's foreseeable that the economy landscape will be completely different in 2023," said Chen.
Miners fell 1% in their second straight session of losses, with iron ore behemoth BHP down 0.7%.
Rio Tinto slid 1.4%, even as the miner reached a restitution agreement with an Aboriginal group whose rock shelters in Western Australia it destroyed two years ago for an iron ore mine.
In other news, the RBA governor apologised to people who regretted taking out mortgages last year based on his guidance that interest rates were unlikely to rise until 2024, only for rates to start climbing in May.
In New Zealand, the benchmark S&P/NZX 50 index closed 0.7% lower at 11,308.31.
The country is likely facing a "shallow" recession as interest rates need to rise further to tame inflation, a top central banker said, suggesting that a pause in the policy tightening streak was still a distant prospect. (Reporting By Navya Mittal in Bengaluru; Editing by Subhranshu Sahu)