It was a second straight loss for the local bourse after it had set a near 11-month high on Friday.
Chief global market strategist at Axi, Stephen Innes, said equities appeared to have entered a period of consolidation following a frantic start to the year.
“But for the reason why it seems easier to paint a speculative cause and effect to fit the narrative,” Mr Innes said.
“Be it the collective US political insanity during Trump’s final days to soaring US bond yields and the uncertainty if the US Federal Reserve is going to push back”.
Wall Street fell from record highs amid an absence of economic data, and after an unsuccessful initial effort by the Democrats to remove President Trump from office.
Tech stocks led losses, while Bitcoin pulled back after its recent surge.
Milford Asset Management portfolio manager Alex Wright said investors were perhaps waiting to see the detail in Joe Biden’s stimulus plan later this week.
“(It) is likely to bolster earnings in cyclical parts of the market,” Mr Wright said.
“The question is, how much of this has already been priced in.”
The mining titans, which underpinned the local market’s stellar start to 2021, again sagged on Tuesday, dropping for a third straight session.
BHP lost 1.1 per cent to $46, Rio Tinto fell 0.8 per cent to $121.41, and Fortescue Metals shed 0.3 per cent to $25.13.
Biotech CSL fell by 1 per cent to $273.07 while Macquarie Group was another heavy weight, down 0.9 per cent to $138.79. Wesfarmers and Woolworths were flat.
The major banks limited losses for the wider index.
Commonwealth Bank nudged a more than 10-month high and finished 0.9 per cent ahead at $85.88, while ANZ hit its highest since March last year on its way to gaining 0.8 per cent to $24.05.
Westpac rose 1 per cent to $20.49 and NAB climbed 1.1 per cent to $23.46.
Tech stocks fell with Afterpay down 1.9 per cent at $111.85 and Xero 2.3 per cent down at $132.76.