At noon AEDT on Monday, the benchmark S&P/ASX200 index was down 66.3 points, or 0.83 per cent, to 7,905.3, while the broader All Ordinaries had fallen 67.3 points, or 0.82 per cent, to 8,141.9.
Prediction markets were anticipating that Vice President Kamala Harris would be the US Democratic presidential nominee, but would have an uphill battle against former president Donald Trump in the general election.
Predict It gave Trump 59 per cent implied odds of victory, compared to Harris' 40 per cent chances.
Meanwhile, the fallout of Crowdstrike's cybersecurity gaffe, which had disrupted computer networks worldwide on Friday, was expected to take weeks to resolve.
In the Middle East, Israeli fighter jets struck an oil port in Yemen in retaliation for a drone attack in Tel Aviv, threatening to broaden the conflict.
The airstrikes were the first time Israel has attacked Yemen during the nine-month war.
Capital.com analyst Kyle Rodda said markets were signalling greater risk aversion and volatility and that the pullback was overdue given valuations were already stretched.
At midday, nine of the ASX's 11 sectors were in the red, while consumer staples were up 0.4 per cent and tech was ahead marginally.
The energy sector was the biggest mover, dropping 2.3 per cent as Brent crude hovered near a five-week low of US$83 a barrel.
Woodside was down 2.8 per cent to $28.40 as Australia's largest oil and gas producer said it would spend $US900 million ($A1.4 billion) to acquire Tellurian, a US company with a fully permitted LNG project under development.
"The acquisition of Tellurian and its Driftwood LNG development opportunity positions Woodside to be a global LNG powerhouse," said Woodside CEO Meg O'Neill.
Santos was down 1.3 per cent, Beach Energy had retreated 2.4 per cent and coalminer Whitehaven Coal had dropped 3.9 per cent.
In the heavyweight mining sector, South32 had dropped 12.3 per cent to a four-month low of $3 after the BHP spin-off missed 2023/24 production guidance at its Worsley alumina mine in WA and its Sierra Gordon copper mine in Chile, while revising downward production targets for 2024/25.
Chief executive Graham Kerr said that overall it was another quarter of improved operating performance with sequentially higher volumes across the majority of operations.
BHP was down 0.7 per cent, Fortescue had dropped 1.5 per cent and Rio Tinto had fallen 0.5 per cent.
All of the big four banks were lower, with ANZ down 1.3 per cent, NAB dipping 0.9 per cent, Westpac retreating 0.7 per cent and CBA subtracting 0.8 per cent.
Droneshield had dropped 21.7 per cent to a one-month low of $1.535 as the defence contractor reported first-half revenue of $24.1 million, more than double that from a year ago.
Investors were apparently hoping for better numbers given how Droneshield shares went parabolic this year.
They are still up 306 per cent year-to-date but fell 16.2 per cent last week.
The Australian dollar had dropped to a three-week low, buying 66.75 US cents, from 67.00 US cents at Friday's ASX close.
