The share market is on track for its sharpest fall in two years and the Australian dollar has lost half a US cent in the aftermath of Wall Street's overnight plunge.

Charles Schwab market analyst Ben Le Brun said there was not even one stock on the Australian share market that opened stronger in the early stages of trading, following Wall Street's slump.

"It is an actual bloodbath," Mr Le Brun said.

"Wall Street has had an appetite for stocks for years on end so it has just been going up in steps and now we are looking at nothing more than a pull-back.

"So, of course, there is fallout here in Australia."

In the US, the benchmark S&P 500 and the Dow Jones Industrial Average suffered their biggest percentage drops since August 2011 as investors grappled with rising bond yields and potentially firming inflation.

The financial, healthcare and industrial sectors fell the most, but declines were spread broadly as all major 11 S&P groups dropped at least 1.7 per cent and all 30 of the blue-chip Dow industrial components finished negative.

At Wall Street's close, the Dow was down 4.60 per cent at 24,345.75, the S&P 500 had lost 4.10 per cent to 2,648.94 and the Nasdaq Composite had dropped 3.78 per cent to 6,967.53.

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The benchmark S&P/ASX200 index was down 172.6 points, or 2.9 per cent, at 5,853.6 points at 1200 AEDT.

Asian stocks plunged Tuesday after a record-breaking loss on Wall Street, extending a global rout as panicked investors fret over rising US borrowing costs and cash in profits after months of market euphoria.

Tokyo led a collapse throughout the region, diving more than five percent, with Hong Kong down more than four percent and Sydney sinking three percent.

Other assets were also hammered, with a slump in oil prices scything energy firms, while higher yielding currencies have been hit by a flight to safe havens.

All Asian markets are tumbling after a second straight session of heavy selling on Wall Street, with Japan's Nikkei down 4.5 per cent and the Korean KOSPI down 2.9 per cent.

Locally, the heaviest falls are being felt by the energy and IT sectors, followed by retailers and health care stocks.

Energy producers were impacted by weaker global oil prices, with Origin Energy down 5.2 per cent, Santos down 4.5 per cent, and Woodside had given up 3.9 per cent.

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Telstra was down three per cent at $3.51, its lowest price in more than two months.

December retail sales dropped by a sharper than expected 0.5 per cent, and JB Hi-Fi was down 2.3 per cent, Harvey Norman had shed 2.9 per cent and Super Retail Group was 3.4 per cent weaker.

The retail data also put further pressure on an Australian dollar, which was trading at 78.71 US cents at 1200 AEDT, down from 79.39 US cents at the end of local trade on Monday.

A stronger iron ore price is helping to shelter some of the big miners from heavy selling, with Rio Tinto down 1.4 per cent and Fortescue Metals down 0.7 per cent, though BHP Billiton was 2.9 per cent weaker.

Gold miners were among the very few stocks to gain ground, with Evolution Mining and Northern Star each up 0.4 per cent.

Westpac was the hardest hit of the big four banks, dropping 3.1 per cent, and National Australia Bank was faring the best, with a fall of 2.4 per cent.

Macquarie Group is down 5.4 per cent despite forecasting a 10 per cent improvement in its annual profit to a record $2.4 billion.

On the ASX:

The benchmark S&P/ASX200 was down 172.6 points, or 2.86 per cent, at 5,853.6 points at 1200 AEDT.

The broader All Ordinaries index was down 176.6 points, or 2.88 per cent, at 5,951.8 points

The SPI200 futures contract was down 168 points, or 2.82 per cent, at 5,793 points

National turnover was 2.8 billion securities traded worth $3.5 billion

Currency snapshot at midday AEDT:

One Australian dollar buys:

78.71 US cents, from 79.39 US cents on Monday

85.89 Japanese yen, from 87.26 yen

63.56 euro cents, from 63.71 euro cents

56.36 British pence, from 56.20 pence

108.20 NZ cents, from 108.63 NZ cents

Gold:

The spot price of gold in Sydney at 1200 AEDT was $US1,338.83 per fine ounce, from $US1,332.25 per fine ounce on Monday.

Bond snapshot at midday AEDT:

CGS 4.50 per cent April 2020, 1.973pct, from 2.0565pct on Monday

CGS 4.75pct April 2027, 2.773pct, from 2.8874pct

Sydney Futures Exchange prices: