Australian shares declined on Tuesday, reversing course after gains on Monday, as investors became risk-averse ahead of the US elections.

The S&P/ASX 200 slumped 1.7% or 138.70 points to close at 8,205.70.

Uncertainties surrounding the US elections, merely two weeks away, coupled with surging oil prices, may have led to a bond sell-off, which in turn affected stock markets, Reuters reported.

"Regardless of who wins, you can't really see a path to fiscal consolidation," said Jack Chambers, a strategist with ANZ.

In economic news, consumer confidence in Australia improved to its highest level since January 2023, with all sub-indices logging an increase, the weekly ANZ-Roy Morgan survey showed.

The ANZ-Roy Morgan Australian Consumer Confidence jumped 4.1 points to 87.5 in the week of Oct. 14 to 20, taking the four-week average to 84.1.

On the corporate front, shares of Iluka Resources (ASX:ILU) shares were down 4% at market close after the mining firm reported a decline in third-quarter production.

Zircon, rutile, and synthetic rutile production fell to 138,300 tonnes in Q3, down from 167,100 tonnes the previous year. Ilmenite production likewise declined to 107,900 tonnes from 123,100 tonnes.

Meanwhile, WiseTech Global's (ASX:WTC) Chief Executive Richard White dropped a bankruptcy case against his alleged former lover Linda Rogan, a notice of discontinuance filed with the Federal Court of Australia in New South Wales showed.

According to the court's website, the status of the case was "closed" as of Monday. Shares of the tech firm rose 3% at market close.

Lastly, Transurban Group (ASX:TCL) reported a 1.1% increase in average daily traffic, at an average of 2.5 million trips per day, in the September quarter following growth across all markets except Melbourne. The toll operator's shares slid 2% at market close.