A fourth consecutive week of ASX losses has further lowered share prices as investors brace for the end of pandemic stimulus.
The market on Friday had its third biggest drop of the year, two per cent, and all share categories were lower.
Financials, consumer discretionaries and property shares had the steepest falls.
Travel was one of few industry groups to prosper. The federal government said Australians can travel overseas once an 80 per cent vaccination rate is reached.
Helloworld Travel closed up more than five per cent. Webjet rose more than two per cent.
Yet selling dominated and the market dropped 2.14 per cent for the week.
VanEck Australia deputy head of investments Jamie Hannah cited a variety of reasons.
The US Federal Reserve is preparing to ease the bond buying which has helped the economy through the pandemic.
There were inflation concerns prompted by countries like China struggling to import enough materials to generate electricity.
Mr Hannah had a relaxed approach to the market response.
"What we need to take into account is over the last year equities have had an unbelievable run," he said.
"Most baskets of equities are up about 20 to 30 per cent over the last year.
"This period is maybe just profit-taking as issues flow through the market.
"I don't think there is anything fundamentally wrong with the market."
US Congress overnight passed laws that will avoid a government shutdown although the debt limit dilemma remains.
The lawmakers need to raise the cap by October 18 for the US to be able to pay its bills.
Meanwhile news on troubled property giant Evergrande has slowed due to public holidays.
The benchmark S&P/ASX200 index closed lower by 146.7 points, or 2.0 per cent, to 7185.5.
The All Ordinaries closed down 143.1 points, or 1.88 per cent, to 7486.6.
Market giant the Commonwealth Bank fared worst of the big four banks and dropped more than four per cent to $100.08. ANZ, NAB and Westpac shed more than two per cent.
In mining, BHP, Fortescue and Rio Tinto all lost more than two per cent.
Gold miners were another of the few groups going against the downturn.
Evolution Mining gained NSW government approval for a new underground mine in the state's west.
The approval will help the company continue producing more than 350,000 ounces from Cowal per year.
Shares were up 2.29 per cent to $3.57.
Seven Group chief executive Ryan Stokes has had a pay rise of $300,000 to $1.9 million.
Seven's market capitalisation has increased from about $2 billion to $8 billion since Mr Stokes took his role in 2015.
Shares were down 1.98 per cent to $20.28.
Engineering group CIMIC has won a $297 million contract to make freight trains.
The UGL subsidiary will make the diesel electric trains in Newcastle for Pacific National.
The sales revenue will be earned over seven years.
Shares were up 0.36 per cent to $19.73.
Building materials supplier Adbri is gaining the sand operations of a quarry operator through a joint venture.
Adbri's equal joint venture with Barro Group will acquire the sand operations of Metro Quarry Group.
Adbri shares were lower by 1.24 per cent to $3.19.
The Australian dollar was buying 72.03 US cents at 1725 AEST, lower from 72.09 US cents at Thursday's close.
ON THE ASX
* The benchmark S&P/ASX200 index closed lower by 146.7 points, or 2.0 per cent, to 7185.5 on Friday.
* The All Ordinaries closed down 143.1 points, or 1.88 per cent, to 7486.6.
* At 1725 AEST, the SPI200 futures index was up six points, or 0.08 per cent, at 7134 points.
One Australian dollar buys:
* 72.03 US cents, from 72.09 cents on Thursday
* 80.08 Japanese yen, from 80.72 yen
* 62.15 Euro cents, from 62.15 cents
* 53.55 British pence, from 53.65 pence
* 104.59 NZ cents, from 104.70 cents.