New South Wales Police cordoned off several neighborhoods in downtown Sydney and launched an investigation into the incident that left shoppers and diners unnerved, but did not lead to any injuries, according to the Sydney Morning Herald.
The news followed an announcement by federal police that five Melbourne teenagers suspected of plotting to commit terrorist attacks on the April 25 commemoration of Australian and New Zealand's veterans known as Anzac Day have been arrested.
One of the young men, Sevdet Besim, has been charged for conspiring to plan a terrorist attack and is being held without bail until his hearing next Friday.
In February, Australian Prime Minister Tony Abbott announced a crackdown on citizens involved in terrorism amid fears of hundreds of Australians joining extremist groups such as the Islamic State in Syria and Iraq.