Volatility is continuing to characterise trade in the first week of July, with investors sending the Australian stock market tumbling 1.6% at noon, a day after it rebounded to post its biggest one-day gain since October 2011.
The market took a hit on global instability and overnight falls across Europe and the United States on revived concerns about the eurozone and the political crisis in Egypt.
At 1205 AEST, the benchmark S&P/ASX200 index fell 1.6% to 4,756.7 points, while the broader All Ordinaries index lost 1.49% to 4,738.5 points.
IG market analyst Evan Lucas said choppy trade was defining the start of the new financial year.
"The instability of the last 24 hours will mostly like flow through to our market today," he said.
Investors were waiting for Reserve Bank governor Glenn Stevens' address at the Economic Society in Brisbane, set for Wednesday afternoon.
"After another very short and sweet statement yesterday with very little changes from the month before, investors will be hanging on every word of his address to see if there are any indications of how the board views the changes in China and the US, where the Australian dollar is expected to head and if further rate cuts are on the cards," Mr Lucas said.
In Australia, the market on Tuesday posted its strongest day in 20 months as the global economic outlook improved and interest rates remained on hold.
Shares gained about $39 billion in value in the largest one-day rise for the ASX200 index since October 6, 2011.
The benchmark S&P/ASX200 index was up 123.7 points, or 2.63%, at 4,834.0 points, while the broader All Ordinaries index was up 120.6 points, or 2.57%, to 4,810.3 points.