The S&P/ASX 200 Index dropped 0.7% to around 7,712 on Monday, extending last weeks decline and tracking losses on Wall Street Friday as a wave of profit-taking hit the markets amid fears that stock valuations have reached heightened levels.

Domestically, sentiment took a hit after data showed that Australias June manufacturing PMI contracted the most since May 2020.

Investors now look ahead to the latest policy meeting minutes from the Reserve Bank of Australia this week to assess the monetary policy outlook.

Financial stocks led the decline, with losses from Commonwealth Bank (-1.2%), ANZ Group (-0.3%), Westpac Banking (-0.9%), Macquarie Group (-1%) and National Australia Bank (-0.9%).

Healthcare, consumer and technology stocks also slumped.

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