At midday on Tuesday, the benchmark S&P/ASX200 index was down 0.14 per cent to 8,940.9, while the broader All Ordinaries slipped 0.11 per cent to 9,164.3.
Markets were "a little nervous but far from panicked" after tensions flared again between the US and Iran over the weekend, Capital.com analyst Kyle Rodda said.
The Strait of Hormuz remained closed, meaning energy markets were still somewhat suffocated.
"But because the missiles are no longer flying and it's judged that it's in both sides' interests to de-escalate, the markets are basically betting that the ceasefire will hold and a peace deal will materialise, however long it takes," Mr Rodda said.
The two-week ceasefire is set to expire on Thursday morning AEST time.
Near midday on Tuesday, five of the ASX's 11 sectors were lower, five were higher, while the property sector was little changed.
The energy sector was the biggest mover, dropping 0.8 per cent as Brent crude oil traded for $US95 a barrel, about the same level as Monday.
Woodside was down 1.3 per cent, Santos had fallen 1.1 per cent, and Beach Energy had retreated 1.9 per cent.
HUB24 was the biggest mover in the ASX200 index, dropping 7.9 per cent to a one-week low of $87.85 after the superannuation platform reported net inflows of $9 billion in the third quarter, up 22 per cent from a year ago.
Elsewhere in the financial sector, all of the big retail banks were lower.
ANZ was down 2.3 per cent, Commonwealth Bank had dropped 0.7 per cent, National Australia Bank had dipped 0.3 per cent and Westpac had slipped 0.4 per cent.
In the heavyweight mining sector, the three iron ore giants were all very slightly lower. Fortescue had dipped 0.2 per cent, and BHP and Rio Tinto were down a bit less than that.
Goldminer West African Resources dropped 1.0 per cent to $3.40 as its shares resumed trading after it released details about Burkina Faso's compulsory acquisition of a greater stake in its Kiaka goldmine.
The military junta that rules the West African country will pay $175 million for an additional 25 per cent stake in the mine, funds that will be distributed to shareholders via a special dividend.
Fellow goldminers Northern Star and Evolution were down 0.8 per cent and 1.3 per cent, respectively, as the precious metal traded for $US4,831 an ounce.
The Australian dollar, meanwhile, was changing hands at 71.74 US cents, up from 71.56 US cents at 5pm on Monday.
