The S&P/ASX200 fell 73.1 points on Friday, down 0.81 per cent, to 8,995.3, as the broader All ordinaries dropped 82.7 points, or 0.88 per cent, to 9,293.2.
The convincing rejection came after the top 200 broke its intraday and closing records on Thursday, ultimately rounding out the week roughly 0.4 per cent higher.
"You always want to see these breaks sort of hold over, say, a 24- to 48-hour period, but here we are back to where we were yesterday morning," IG Markets analyst Tony Sycamore told AAP.
The heavyweight financials sector dragged on the bourse, dropping 1.2 per cent after two US regional banks posted heavy loan-related drawdowns, fanning fears of a repeat of the 2023 regional banking crisis.
"You've got some little signs of credit market stress with the nightmare of the 2023 crisis being reawakened overnight, and it's not a particularly good look to finish the week," Mr Sycamore said.
"It's been just percolating away in the background for a while ... but it matters now because suddenly some of these banks are starting to come out saying, 'We've got some pretty dodgy credit on our book'."
While Australia's banks were unlikely to have direct exposure to such loans, Commonwealth Bank was the only big four player to edge higher, eking a 0.1 per cent lift as ANZ, NAB and Westpac lost between 0.5 and 0.8 per cent.
The broader sector was a sea of red, with major insurers QBE (-9.1 per cent), IAG (-6.2 per cent) and Suncorp (-4.3 per cent) selling off.
Energy stocks were hammered as oil prices plumbed five-month lows, with US-China trade tensions dragging on against a backdrop of oversupply from OPEC+ and planned talks to end the war in Ukraine.
Raw materials stocks managed to edge higher for a fourth straight record close as goldminers, Rio Tinto and Fortescue helped counterbalance weakness and profit-taking in other commodities.
Gold hit a fresh peak before the ASX open to trade at $US4,379 an ounce, buoyed by safe-haven inflows and narrowing bets on incoming US interest rate cuts.
Rare earths producers such as Iluka Resources and Lynas Rare Earths sold off after rallying most of the week on the back of China's flagged export controls, but pared most of their losses by the close.
Consumer staples outperformed the broader market with a modest 0.3 per cent lift, with Woolies and Treasury Wines shining.
Australia's tech sector continued to sell off, slipping 1.9 per cent on Friday and down almost five per cent in October, tracking with an uncharacteristic pullback on Wall Street's tech-heavy Nasdaq index in recent days.
Bitcoin remains under selling pressure after a wipeout a week earlier that slashed more than $US475 billion ($A734 billion) from the cryptocurrency sector's more than $US4.1 trillion value.
One Bitcoin is trading at $US108,320, shedding 14 per cent since hitting a record high above $US126,000 on October 6.
The Australian dollar is buying 64.76 US cents, down from 64.94 US cents on Thursday at 5pm.
ON THE ASX:
* The S&P/ASX200 lost 73.1 points, or 0.81 per cent, to 8,995.3
* The broader All Ordinaries rose 82.7 points, or 0.88 per cent, to 9,293.2
CURRENCY SNAPSHOT:
One Australian dollar trades for:
* 64.76 US cents, from 64.94 US cents on Thursday
* 96.96 Japanese yen, from 98.09 Japanese yen
* 55.24 euro cents, from 55.69 euro cents
* 48.08 British pence, from 43.38 British pence
* 112.91 NZ cents, from 113.10 NZ cents
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