The S&P/ASX 200 index slid 0.7% to close at 6,184.60, marking its worst session since Oct. 2. The benchmark gained 0.9% on Monday.
Italy approved the shutting of public squares from 9 p.m. and many regions in Spain tightened curbs as COVID-19 cases spiked. Meanwhile, in Britain the government scientific adviser said the country needs to impose a three-week period of national lockdown.
“The virus numbers are pointing to a second wave globally. This may lead to more severe shutdowns and lower economic activity,” said Brad Smoling, managing director at Smoling Stockbroking.
Adding to market uncertainty, U.S. House Speaker said she hoped that by the end of Tuesday there will be “clarity” on whether a coronavirus stimulus bill can be passed before the Nov. 3 presidential election.
“The U.S. stimulus talks are just about out of time. I now believe that neither side wants to make a move before the election outcome,” Smoling said.
The Australian financial index fell 1.2%, weighed by losses in the “Big Four” banks.
Australia and New Zealand Banking Group, National Australia Bank Commonwealth Bank of Australia and Westpac Banking Corp fell between 1% and 1.4%.
Miners fell 1.1%, dragged down by losses in BHP Group Rio Tinto.
In a bright spot, technology stocks gained 1.7% and closed at a record high, boosted by buy-now-pay-later firm Afterpay’s near 6% gain after a partnership with Westpac Banking to offer savings accounts.
In New Zealand, the benchmark S&P/NZX 50 index rose 0.62% to 12,462.1.
Top gainers were Serko Ltd, up 3.6%, followed by Port of Tauranga Ltd, gaining 3.5%.