Wall Street experienced another steep fall overnight as rising geopolitical risks and fears of a recession sparked a broad market sell-off.

The Dow Jones index tumbled 391 points, or 1.4 per cent, to 25,893. The benchmark S&P 500 and tech-heavy Nasdaq indices dropped 1.2 per cent each.

Market snapshot at 7:50am (AEST): ASX SPI futures -0.8pc at 6,480, ASX 200 (Monday's close) +0.1pc at 6,590

ASX SPI futures -0.8pc at 6,480, ASX 200 (Monday's close) +0.1pc at 6,590 AUD: 67.49 US cents, 55.88 British pence, 60.15 euro cents, 71.03 Japanese yen, $NZ1.05

AUD: 67.49 US cents, 55.88 British pence, 60.15 euro cents, 71.03 Japanese yen, $NZ1.05 US: Dow Jones -1.5pc at 25,896, S&P 500 -1.2pc at 2,883, Nasdaq -1.2pc at 7,683

US: Dow Jones -1.5pc at 25,896, S&P 500 -1.2pc at 2,883, Nasdaq -1.2pc at 7,683 Europe: FTSE 100 -0.4pc at 7,227, DAX -0.1pc at 11,680, CAC -0.3pc at 5,310, Euro Stoxx 50 -0.2pc at 3,327

Europe: FTSE 100 -0.4pc at 7,227, DAX -0.1pc at 11,680, CAC -0.3pc at 5,310, Euro Stoxx 50 -0.2pc at 3,327 Commodities: Brent crude -0.4pc at $US58.30/barrel, spot gold +1pc at $US1,511.16/ounce

Investor sentiment was also weighed down by the intensifying Hong Kong protests, the protracted US-China trade war, and a plunge in Argentina's currency and stock markets.

As investors fled from risky assets, they piled into safe haven assets like spot gold, which jumped 1 per cent to $US1,512 an ounce.

The Japanese currency also jumped 0.8 per cent — one Australian dollar is buying 71.05 yen, its lowest level in more than 10 years.

The retreat to safer investments also led to a fall in America's long-term interest rates, with its 10-year Treasury bond yield sinking to 1.64 per cent.

ASX slips amid geopolitical risk

Despite the foreign market sell-off, the ASX 200 slipped by just 0.3 per cent to 6,569 points at 1:45pm (AEST).

Westpac outperformed its banking rivals, rising 0.2 per cent, after it won a case in the Federal Court, launched by the Australian Securities and Investments Commission (ASIC).

ASIC argued unsuccessfully that the nation's second-largest bank had breached responsible lending laws up to 262,000 times.

It fared better than the other major banks, with Commonwealth Bank (-0.4pc), ANZ (-0.3pc) and NAB (-0.2pc) .

Shares in fund management firm Challenger jumped 6.5 per cent, and was the best performer on the local benchmark index.

Challenger reported a flat full-year profit of $548 million, towards the lower end of what it had previously forecast.

However, the company reiterated its profit outlook for the 2020 financial year ($500m - $500m) and maintained its final dividend at 18 cents per share.

Healthcare stocks dragged down the market, with sharp losses for CSL (-1.2pc), Cochlear (-3.5pc) and Mayne Pharma Group (-2.1pc).

On the flipside, mining giants Fortescue Metals (+3.4pc), BHP (+0.4pc) and Rio Tinto (+0.5pc) — which have been under pressure from falling iron ore prices — rebounded from yesterday's losses.

Flight to safety as Argentinian market plunges

Market sentiment turned sour after Argentina's peso plunged 15 per cent to 55.85, against the US greenback — and its benchmark stock index, the Merval, plummeted 38 per cent.

Combined with the currency slump, Argentina's main stock index lost around half its US dollar value in a day — the second worst one-day fall for a major share index, only eclipsed by Sri Lanka's one-day drop in 1989.

This was after Argentinian voters snubbed the market-friendly president, centre-right leaning Mauricio Macri, by giving the opposition a greater-than-expected victory (a 15.5pc margin) in Sunday's primaries, ahead of the final election in October.

The victory by populist candidate Alberto Fernandez — whose running mate is former left-wing Argentine President Cristina Fernandez de Kirchner — "paves the way for the return to left-wing populism that many investors fear," consultancy Capital Economics told clients.

"Argentine's and Hong Kong's travails have had some contagion effect to broader emerging markets," said NAB's head of foreign exchange strategy Ray Attrill.

The JP Morgan EM FX index has fallen about 4 per cent since late-July, and is almost down to a one-year low, he said.

"This is a key factor behind our recently downgraded forecasts for both the Australian and New Zealand dollars."

However, OANDA senior market analyst Jeffrey Halley believes the fallout will be "fairly localised".

"Argentina belongs to that special economic management club that counts countries such as Venezuela, Zimbabwe and North Korea among its members.

"What it does highlight is that economic populism is alive and well in all corners of the globe — a far more worrying development in the long-term than a US-China trade war."

Hong Kong and recession risk

Investors also retreated from stocks after Hong Kong's airport cancelled all flights, as the pro-democracy protests continue with no end in sight.

"Fear is rising that the economic damage to the region could be long-lasting, as it is far from clear how the escalating tension, now ten weeks old, is going to be resolved," said ANZ senior economist Catherine Birch.

"These developments will increase tension with mainland China and damage the Hong Kong economy, with growing fears that the region will enter recession."

Furthermore, the protracted trade dispute between Washington and Beijing over trade could lead to recession and is unlikely to be resolved before the next US election in 2020, according to economists from Goldman Sachs.

"We expect tariffs targeting the remaining $US300 billion of US imports from China to go into effect," the investment bank said in a note sent to clients on Sunday.

US President Donald Trump announced, earlier this month, that he would impose a 10 per cent tariff on a final $US300 billion worth of Chinese imports on September 1.

This prompted China to let its currency weaken to an 11-year low and halt purchases of US agricultural products.

"Overall, we have increased our estimate of the growth impact of the trade war," the bank said in the note authored by three of its economists, Jan Hatzius, Alec Phillips and David Mericle.

The Goldman Sachs economists lowered their fourth-quarter US growth forecast by 20 basis points to 1.8 per cent due to a larger-than-expected impact from the developments in the trade tensions.

ABC/Reuters