Australian stocks are tanking

Jordan Thompson of Australia reacts after losing a point in his match against Bernard Tomic of Australia during day four of the Sydney International. Matt King/Getty Images

Australian stocks were sold down hard.

The ASX 200 fell more than 2% in early trade with the index below 4900 before regaining some lost ground. At the close, the index was at 4,909.40, down 78.04 points or 1.56%.

The local market followed Wall Street overnight where the S&P 500 shed 2.5% and the tech-heavy Nasdaq dropped 3.4%.

Commodities also had a bad night with oil down more than 2.2% and iron ore 4.1%.

Chris Weston, chief market strategist at IG, said the market was vicious and everyone was asking whether this was the start of something bigger.

“Australian stocks are getting smashed today,” Weston told Business Insider. “It’s pretty ugly.”

The market couldn’t see a support mechanism.

“Central banks cannot do anything from here,”Weston said. “What we’ve been seeing this year is the market saying to themselves, ‘We are vulnerable’ and that’s why we are seeing such violent price action.”

On the ASX, the market was down for the ninth time in ten sessions. All ten sectors were in the red, with the major banks dropping and big miners leading the falls.

The Commonwealth was down 1.8% to $79.54. BHP narrowed its losses to be down 0.4% to $14.71. Rio Tinto dropped 1.5% to $38.93.

Energy stocks lost 3% across the board with Santos shedding 5.8% to $2.93.

The only companies doing well were gold miners after a rise overnight in prices for the precious metal. Northern Star was up 5.7% to $2.66 and Evolution 5.3% to $1.38.