ASX futures were down 139 points (or 2.3 per cent) by 6:00am AEST.

The Australian dollar fell (-0.9pc) to 72.7 US cents, and was much weaker against other currencies.

It also dropped sharply (-0.9pc) to 61.3 euro cents and 77.17 Japanese yen, and had slipped (-0.3pc) to 54.74 British pence.

Spot gold retreated (-0.6pc) to $US1,931.20 an ounce, while Brent crude oil declined (-1pc) to $US43.97 a barrel.

Investors got 'a bit spooked'

Overnight, the tech-heavy Nasdaq led the declines on Wall Street as its heavyweight stocks took a hit including Facebook, Apple, Amazon, Microsoft, and Google's parent company, Alphabet — down between 3.7 and 8 per cent each.

The five stocks, deemed stay-at-home winners during the coronavirus crisis, also account for roughly a quarter of the S&P 500's market value and have driven the stock market's narrow technology-led recovery from the pandemic lows hit in March.

In the end, the Nasdaq fell by 5 per cent to 11,458 points, while the S&P 500 lost 3.5 per cent to 3,455.

The industrial-skewed Dow Jones index dropped 808 points (or 2.8 per cent) to 28,184.

At its lowest point, the Dow had plunged by more than 1,000 points.

The pullback comes a day after the S&P and the Nasdaq closed at record levels and the Dow came within 1.5 per cent of its February peak, powered by fiscal and monetary support hopes for a swift economic recovery.

European markets were also hit hard, including Britain's FTSE (-1.5pc) and Germany's DAX (-1.4pc).

But some participants said investors had become too optimistic.

"Think about the mounting number of risks the market has been shrugging off over the last couple of months here," said Emily Roland, co-chief investment strategist of John Hancock Investment Management.

"We're 60 days away from the election. That may be an area where investors are getting a bit spooked.

"Looking at the data today, the market has had the ability to power higher and hasn't paid any attention to a macro environment which, yes, is improving which is encouraging, but the economy remains fragile here."

Earlier in the day, data showed the number of Americans filing new claims for unemployment benefits fell more than expected last week, but remained extraordinarily high.

Still, some investors seemed unconcerned in the face of the sell-off.

"The prevalent attitude in the market now is that this is a healthy correction," said Mike Zigmont, head of trading and research at Harvest Volatility Management in New York.

He said investors "are in love with tech stocks and it's going to take more than this for them to fall out of love with them".

Another Nasdaq heavyweight, Tesla, tumbled 8 per cent after already falling sharply for two straight sessions.