Australian stocks plunged 5% in morning trade today following stock market carnage in the United States and Europe overnight.
At 11:15 am (06:45 am IST), the benchmark S&P/ASX 200 was down 196.3 points at 3,789.8 as fear prevailed following the unprecedented downgrade of the United States by Standard & Poor's.
Macquarie Private Wealth associate director Lucinda Chan said the worry on the market was the prospect of weak US and European economies hitting Australia's key export markets in Asia.
"It is all about us being interconnected in so many different ways these days," Chan said.
"The concern now is whether there will be a double-dip [recession] in the US market, and secondly, the European situation is still pretty dire."
IG Markets analyst Ben Potter suggested there might be some relief with the release later today of a raft of Chinese economic figures.
"Whilst most economic data is ignored in these types of indiscriminate markets, today's barrage of Chinese data will still be watched closely," he said.
Of the major companies, Rio Tinto was down 6.3%, BHP was off 4.4% and Commonwealth Bank was 3.6% lower.
The Australian dollar has tracked markets down and was more than two US cents weaker this morning as the American credit downgrade dragged on sentiment.
In mid-morning trade, the Aussie was trading at 100.96 US cents, down from 103.55 cents yesterday. The dollar hit a peak of 110.81 US cents on July 27, its highest level since it floated in December 1983.
