At closing bell, the benchmark S&P/ASX200 fell 84.98 points, or 1.18%, to 7,120.65. The broader All Ordinaries index dropped 109.65 points, or 1.47%, to 7,357.94.
Shanghai was tightening a city-wide Covid-19 lockdown imposed more than a month ago, prolonging into late-May an ordeal that China's capital Beijing was desperate to avoid by turning mass testing into an almost daily routine.
Investors also remained concerned about aggressive policy tightening by global central banks, with a focus on US consumer prices data on May 11 to gauge further actions on interest rates by the Federal Reserve.
Shares of materials and resources were lower on a slide in iron ore prices. The mining trio BHP Group, Rio Tinto and Fortescue Metals Group dropped between 1.3% and 5.8%.
Financials were mixed, with Australia and New Zealand Banking Group falling 2.7%, while Westpac Banking gained 3.2% after the country's third-largest bank beat first-half earnings estimates and forecast lower expenses in the second half of the year. WBC also raised its dividend slightly to 61c.
Shares of fund manager Magellan Financial Group (MFG) fell by 8.4% after announcing the sale of its equity stake in fast food chain Guzman y Gomez (GYG) for a cash consideration of A$140 million. The sale represents a 36.3% premium to MFG's entry price in January 2021. MFG says that the sale is consistent with its strategy to focus on its core funds management business.
CURRENCY NEWS: The Australian dollar changed hands at $0.7007 after last week's drop from above $0.721.
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