The benchmark S&P/ASX200 index on Thursday finished down 37.4 points, or 0.49 per cent, to 7,628.2, while the broader All Ordinaries dropped 39.8 points, or 0.5 per cent, to 7,895.9.
The day's losses left the ASX200 down 0.47 per cent since the start of May, with one day of trading left in the month. In April the ASX200 dropped 3.0 per cent.
Capital.com market analyst Kyle Rodda said a rise in global yields was forcing a re-rating in global equity prices and a non-trivial risk of another domestic rate hike was also weighing on domestic shares.
Assistant Reserve Bank governor Sarah Hunter told an investors' conference on Thursday the RBA board was "absolutely focused" on the fact inflation was still above target range.
The futures market now implies a 27 per cent chance the Reserve Bank will raise rates, up from 14 per cent before Wednesday's higher-than-expected April inflation readout, according to CommSec analyst Ryan Felsman.
Six of the ASX's 11 sectors finished lower, with mining the biggest loser, dropping 1.9 per cent as a firmer US dollar weighed on commodities prices.
BHP fell 1.7 per cent to $44.30 as the Big Australian said it would not make a firm offer for Anglo American after Anglo's board refused to extend a deadline imposed by British takeover law.
"We remain of the view that our proposal was the most effective structure to deliver value for Anglo American shareholders and we are confident that, working together with Anglo American, we could have obtained all required regulatory approvals, including in South Africa," BHP chief executive Mike Henry said.
But the $74 billion saga might not be over, because BHP could make another tilt at Anglo American in six months' time.
Elsewhere in the sector, Fortescue dropped 3.1 per cent to $24.78, Rio Tinto slipped 1.5 per cent to $127.66 and goldminer Northern Star fell 2.8 per cent to $13.96.
Boral dropped 1.5 per cent to $5.74 as Seven Group filed a notice it was compulsory acquiring the remaining shares in the construction materials company left outstanding as part of its $6.9 billion takeover bid.
In the heavyweight financial sector, the Big Four banks finished mixed in more quiet trading.
ANZ added 0.2 per cent to $27.93, NAB dipped 0.1 per cent to $33.61 and Westpac and CBA both fell 0.3 per cent, to $25.93 and $117.99, respectively.
Catapult Group was the biggest gainer in the All Ordinaries, rising 9.7 per cent to a two-and-a-half year high of $1.70 after the sports technology company said its revenue grew 20 per cent to a record $US100 million ($A151 million) for the 12 months to March 31 as more professional teams signed up for its athlete-monitoring platform.
"FY24 was a historic year for Catapult," chief executive Will Lopes said.
The Melbourne company's wins for the year included a "very material," multimillion-dollar deal with the powerhouse US collegiate athletic conference known as the SEC, he told analysts.
The Australian dollar had dropped to close to a three-week low against its US counterpart, buying 65.97 US cents, from 66.58 US cents at Wednesday's ASX close.
ON THE ASX:
* The benchmark S&P/ASX200 index on Thursday dropped 37.4 points, or 0.49 per cent, to 7,628.2
* The broader All Ordinaries fell 39.8 points, or 0.5 per cent, to 7,895.9.
CURRENCY SNAPSHOT:
One Australian dollar buys:
* 65.97 US cents, from 66.58 US cents at Wednesday's ASX close
* 103.52 Japanese yen, from 104.56 Japanese yen
* 61.13 Euro cents, from 61.33 euro cents
* 51.99 British pence, from 52.14 pence
* 108.22 NZ cents, from 108.40 NZ cents
7°C