After a dramatic weekend in Greece and China, the S&P/ASX 200 closed down 63 points, or 1.1 per cent, to 5475, while the broader All Ordinaries fell 65 points, or 1.2 per cent, to 5463.

The Aussie dollar, meanwhile, dropped below US75¢ for the first time in six years, hitting a new low of US74.53¢ before recovering to just above US75¢ as international trade took over.

The decline in Australian shares was similar to Friday's fall, when a 6 per cent tumble in the price of iron ore weighed heavily on the share market, along with jitters about Greece and the Chinese government's attempt to arrest volatility in its share market.

The Shanghai Composite Index had another rollercoaster day on Monday, opening 7.8 per cent higher before falling below its opening level and then finally climbing to end the session up about 2.4 per cent.

China suspended initial public offerings at the weekend, while brokerages pledged to buy shares and the People's Bank of China promised more liquidity for margin trading. The latest raft of moves follows a new round of monetary easing by the central bank.

Australia and New Zealand Banking group's chief China economist Li-Gang Liu said the slumping stockmarket raised concerns about systemic risks.

"Over the weekend, authorities have taken decisive measures to prevent another free fall in the stock market," he said.

"We caution these measures are meant for short-term fix, but can't address the fundamental problems facing China's equity and financial system."

It was Greece's surprise rejection of the conditions of the latest European Union and International Monetary Fund bailout deal that first weighed on local shares.

The general flight from risk also pushed down bond yields as investors bid up the price of 10-year and three-year paper.

Shares sold off across the board, with the mining segment hit particularly hard as the price of iron ore continued to fall.

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

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

Telstra fell 0.2 per cent, Woolworths dropped 1.8 per cent and Wesfarmers lost 0.9 per cent.

Monday's market ructions are expected to offer a foretaste of the volatility to come as European leaders and the European Central Bank schedule meetings to decide on Greece's future.

Many experts predict Sunday's "no" vote should mean a return to the negotiating table. However, European ministers remain split on whether or not to offer the country further concessions on the terms of the current €16 billion bailout.

Recognising his own own negotiating position had become untenable, Greek finance minister Yanis Varoufakis on Monday resigned his position.

"It is now up to the Greek authorities to propose a new set of austerity measures to the Eurogroup and IMF," said Commonwealth Bank senior currency and rates strategist  Peter Dragicevich.

"Negotiations are likely to be challenging, even with the resignation of [Mr] Varoufakis.

"Moreover, the Eurogroup may not want to create a moral hazard by simply giving into the Greek government's demands in fear it could generate the same political environment in other heavily‑indebted nations across the region."

AMP Capital head of investment strategy Shane Oliver said he was not surprised by the no vote, and that a Greek exit from the eurozone, a "Grexit", was highly likely.

"I secretly figure at the end of the day, once Greece finally leaves there will be a relief rally, that the thorn in the side of the euro is gone," Mr Oliver said.

"They're the ones who triggered each crisis; they're the ones who have struggled to manage the problem of economic austerity, unlike [countries like] Spain and Italy who have got their act together."

Mr Oliver said Monday's Australian sharemarket fall of more than 1 per cent reflected a degree of nervousness in the market. "The risks are down, but there's still the fear of the unknown."

Patersons research and strategy co-ordinator Andrew Quin echoed Mr Oliver's comments that the market was in a period of the unknown, which "makes people run to the sidelines".

"The Australian market's reaction at the moment is reasonably negative because it has become 'real' with the no vote," he said.

"There's no real need to make a definite decision on where you want to position yourself until it gets clarified, which you see it doing today.

"We have bigger issues in the background, and that relates to what's happening in China: it makes trading a little bit more cautionary.

"Greece's debt problems are not over; this is just the beginning. They owe a lot more money to other creditors, and because of the banking structure being closed at the moment, it adds up to hard times ahead and less ability to pay its debt position."

Grant Forster, chief executive of Principal Global Investors. said the strong "no vote" had surprised investors.

"The investing community, based on a few different polls, were probably two-thirds expecting a yes vote," said

"From a rational perspective, markets players are trying to look at the situation rationally, the Greek people overwhelmingly want to stay in the EU and euro, but they're also getting right behind their government in kicking out the austerity measures."

Mr Forster said the likely outcome is Greece's exit from the eurozone.

"The market reacted in a way that was tolerable of the missed IMF payment on June 30, but it doesn't take much digging around to see that rarely do countries default on IMF payments. Even Argentina, when they've missed some payments, have not missed IMF payments," he said.

He said the market's so-far moderate reaction suggests they may be underestimating the flow-on effects of a Grexit.

"It's still early days in the full European recovery; you'd hardly describe that as being robust. We haven't seen a line like in the US where there's low unemployment, growth coming back."

Perpetual global equities portfolio manager Garry Laurence said that Greece itself, at only 2 per cent of Europrean GDP, was a very small part of the global economy.

"It's just creating a lot of uncertainty and what you're seeing is risk premiums starting to rise," he said.

"The uncertainty in global markets is around what the ramifications are of Greece exiting and how much debt they actually owe, and who owns that debt, and what it all means.

"I wouldn't be surprised if they do agree on something but if they really do default, its not so significant to global GDP growth."

Ausbil chief economist Jim Chronis said developments from Greece was not news to change asset markets or asset allocation.

"The thing that is new is that we know is the US is recovering quite well and rates will increase," he said.

"You should be really focusing on the US and when they hike rates. It's a question of will they do it."

Mr Forster said an area worth investigating was domestic small-to-mid cap companies exposed to domestic earnings in the US; they were a "decent strategy to have in your portfolio" compared with US-domiciled companies with currency exposures. Traditional safe havens including US bonds, even at very low interest rates, were also attractive.

"Now that the market's potential has come off, there are areas to invest in. Those who have a decent cash level now, in the next couple of months should be ready and able to invest," Mr Forster said.

Mr Oliver said there were opportunities for internationally-focused investors in European stocks.

"I think Europe will hang together with easy monetary policy in Europe and a lower euro which will help profit growth," he said.

"Also, stocks which benefit from a lower Australian dollar, have low offshore exposure, will benefit. I think the trick in all of these things is not to panic."