Australian shares slipped marginally on Monday, with energy and financial stocks leading the declines, as a surge in COVID-19 cases in Sydney led states and territories to ban travellers from the city, stoking fears of a delayed economic recovery.

The S&P/ASX 200 index edged 0.06% lower by 0009 GMT.

Projections of the Australian economy recovering from its first recession in three decades faster than previously anticipated were dismantled after Sydney, the country's most populous city, detected a new virus cluster which had grown to a count of around 70 as of Sunday.

The Australian Capital Territory (ACT) sent a stern "do not come to us" message to Sydney, warning its residents they would be quarantined for 14 days if they arrived.

The states of Victoria, Queensland, and the Northern Territory banned people arriving from Sydney as of Monday.

Among individual sectors and stocks, the energy sub-index fell as much as 1.8% to its lowest in nearly three weeks, as oil prices slipped.

Woodside Petroleum shed about 2.5% while Santos declined as much as 2.2%.

The heavyweight financial index fell over 1% to hit a near three-week low. The "Big Four" banks slid between 0.3% and 1.1%.

Limiting losses on the benchmark, the healthcare sector gained 0.5%, with CSL rising 0.6% and Resmed Inc climbing nearly 2% to its highest since Dec. 9.

Australian technology stocks added 1.2% with Afterpay gaining over 5% and Tech One rising nearly 2%.

Meanwhile, New Zealand's benchmark S&P/NZX 50 index dipped 0.02% to 12,680.06. Kathmandu Holdings fell nearly 4% to a three-week low.

A2 Milk lost as much as 5% to hit its lowest since Jan. 4, 2019, after Citi Research cut price target on the stock to A$9.50 from A$14.20, after the dairy company slashed its half-yearly and annual revenue outlook last week.