In the first 20 minutes of trading, the Australian stock market fell more than 5%, knocking tens of billions of dollars off the value of the country's leading corporations as global markets tumbled on fears of more aggressive interest rate hikes from the US Federal Reserve.

At 10:17am AEST, the All Ordinaries index fell 5.4%, or 384 points, to 6,761, falling below the critical 7,000-point threshold.

After plunging below 7,000 on Friday, the benchmark ASX 200 index, which includes Australia's largest firms, lost 5.2% of its value, to 6,570.

In early trading, all sectors were in the red, with the ASX Resources index, which includes the country's largest miners such as BHP and Rio Tinto, dropping 6.3%.

There were sharp declines for the major banks, with Westpac (-7.3%) suffering the most, followed by National Australia Bank (-5.5%), ANZ (-5.5%), and the Commonwealth Bank (-5.5%). (-4.9 per cent).

The Australian dollar fell below 70 US cents, reaching a low of 69.20 US cents, as the stock market dropped and the US currency got its highest level in two decades on anticipation of additional hefty rate hikes by the Federal Reserve.

At 10:15 a.m. AEST, the currency had recovered from its daily low and was trading near 69.42 US cents.

Wall Street collapse

After consumer inflation in the United States reached a 40-year high on Friday, investors fled Wall Street, fearing that rapid interest rate hikes could lead to a recession.

The benchmark S&P 500 index closed down 3.9% at 3,750 on Friday, following the release of official statistics indicating that annual inflation reached a 40-year high of 8.6%.

The Federal Reserve, the central bank of the United States, is likely to hike interest rates later this week by as much as 0.75 percent.

Next year, traders anticipate that US interest rates will peak at 4 percent.

The S&P 500 is down about 22% from its record closing high on January 3, indicating a bear market, or a falling market.

Consequently, the index is in a bear market and has declined by one-fifth since its January high.

In the past four trading days, the index has declined, with all major industry sectors falling dramatically, including tech titans Apple (-3.8%), Microsoft (-4.2%), and Amazon (-3.5%). (-5.4 per cent).

Global markets are under pressure as a result of rising prices, the conflict in Ukraine, and a tightening global supply chain.

The Dow Jones index sank 2.8% to 30,517, while the Nasdaq Composite index fell 4.7% to 10,809.

The CBOE Volatility index, also known as the VIX, reached its highest level in almost a month.

The yield spread between 2- and 10-year US Treasury bonds flipped for the first time since April, indicating that investors anticipate a recession.

The yield on 10-year US Treasury bonds reached 3.44 percent, its highest level since April 2011.

In Europe, the FTSE 100 slid 1.5% to 7,206, the DAX in Germany dropped 2.4% to 13,427, and the CAC 40 in Paris down 2.7% to 6,006.

Even crypto money was not immune to the stock market contagion.

Bitcoin fell 14% to $US22,725 per digital coin after a major US crypto currency network lender, Celsius Network, stopped withdrawals and transfers due to "extreme" market conditions.

In addition, an investor has filed a lawsuit against the Binance US cryptocurrency exchange over the collapse of stable coin Terra USD, which the investor claims was advertised as a secure investment.

Safe havens were also sold off, with spot gold falling 2.8% to $US1818.82 per ounce and Brent crude oil up 0.3% to $US122.20 per barrel at 7:20am AEST.