But the local sharemarket's fortunes this week would be led by the overnight market responses in Europe and the US, he said.

CMC chief markets analyst Ric Spooner agreed the overnight markets including European and US equities and European bonds would be watched closely to gauge reaction from markets closer to the drama.

"It all might provide some insight in the thinking of a potential for contagion," he said.

The mining sector struggled today after the iron ore price slumped 11 per cent last week to $US55.26 a tonne, the lowest price since April.

Rio Tinto fell 2.5 per cent to $51.16, BHP Billition lost 2.2 per cent to $26.01 while Fortescue Metals Group shed 5.8 per cent, taking its shareprice to a six-year low of $1.71.

"The downward moves in iron ore and oil in particular are a couple of leading concerns for mining and energy stocks at the moment," Mr Spooner said.

"In the case of iron ore, shipments are increasing again, putting downward pressure on spot prices, while with oil, I think the market's reacting to the fact that the much-awaited cuts in US shale oil have not occurred," he said.

"I also suspect there is some defensive action being taken against when the oil market will be lifting sactions in Iran," he said.

While oil plunged, gold stocks profited from some afe-haven buying in the precious metal, which rose 0.3 per cent. The day's share winners were gold miners Evolution Mining, up 7.4 per cent, and Northern Star Resources, up 3.3 per cent.

The banks were all down, with Commonwealth Bank down 0.4 per cent, Westpac and ANZ Banking Group down 0.8 per cent and National Australia Bank down 0.7 per cent.

Telstra fell slightly down 0.2 per cent, Woolworths was down 1.8 per cent and Wesfarmers lost 0.9 per cent.

Mr Spooner said he wouldn't be surprised to see volatility similar to last week's sell-offs and rallies.

"Volatility is going to be a feature of financial markets going forward, the reason for that is there is what seems to be a gradual recovery in the major economies of Europe, the US and Japan, but they're at a pretty fragile state, and shocks like Greece or disappointing data in China will magnify the responses of the market," Dr Peter said.