The Australian share market has closed one per cent lower as investors fretted over the possibility the US Federal Reserve could soon raise interest rates.
Federal Reserve vice chairman Stanley Fischer said over the weekend that the US central bank would not wait for inflation to hit two per cent before tightening policy.
That unnerved investors, sending the US futures market lower and pushing Asian markets into the red, OptionsXpress market analyst Ben Le Brun said.
"It (a rates rise in the US) could signal the end of the easy-money party that we've seen come out of the GFC, and it would be the first rates hike in eight years," he said.
Investors are uncertain how a rates hike could affect the US economy, the world's largest, Mr Le Brun said.
Monday's fall caps a horror month for investors, with the market dropping 8.83 per cent in August, its worst monthly performance since the GFC.
Commonwealth Bank shed $1.28 to $75.08, National Australia Bank reversed 41 cents to $31.17, ANZ dropped 60 cents to $27.93 and Westpac dumped 48 cents to $31.10.
In the resources sector, BHP Billiton was 31 cents weaker at $25.18, Rio Tinto descended 81 cents to $50.29 and Fortescue Metals nudged one cent higher to $1.91.
Woolworths was one of the worst performers, dropping $1.00 to $26.40 after Friday's news of a profit fall and further board changes.
Mining services group Bradken was steady at $1.165 after it decided against a merger with Chile's Magotteaux Group.
Education provider Vocation fell 0.4 cents to 9.3 cents after its full year losses blew out to more than $300 million following the scandal surrounding its Victorian operations.
Dairy co-operative Murray Goulburn's unit trust lifted 8.5 cents to $1.94 after it said low prices for dairy commodities may recover later this year.
Transfield Services was 9.5 cents richer at $1.17 after the construction firm said its lucrative contract to run the Nauru and Manus Island offshore detention centres is expected to be renewed.
KEY FACTS
* At the close on Monday, the benchmark S&P/ASX200 index was down 56.6 points, or 1.08 per cent, at 5,207 points.
* The broader All Ordinaries index was down 52.6 points, or one per cent, at 5,222.1 points.
* The September share price index futures contract was 67 points lower at 5,167 points, with 38,052 contracts traded.
* The price of gold in Sydney at 1700 AEST was $US1,133.70 per fine ounce, up $US3.60 on Friday's price of $US1,130.10.
* National turnover was 1.97 billion securities worth $6.3 billion.
