Australian shares drop sharply after Wall Street plunge

Australian shares are bleeding red at the open to hit a new 12-month low, following a similar drop on Wall Street overnight.

The stock market is down to its lowest level in 12 months. Source: AAP

It was a bloodbath for Australian shares at the open as the market plummeted to a new 12-month low, following a dive on Wall Street overnight amid a cocktail of disappointing economic and trade news.

The biggest local losses have been across the energy, resources, infotech, and telco sectors, which are down by more than two per cent in early trade, while the banks are not far behind.

The benchmark S&P/ASX200 index dropped 111.4 points, or 1.91 per cent, to 5717.6 at 1030 AEDT at the start of likely the fifth session of losses, with the market having already hit a new six-month low on Wednesday on plunging energy and materials stocks.

The broader All Ordinaries is down 114.5 points, or 1.93 per cent, at 5812.0, while the Australian dollar has also dropped, and is buying 70.63 US cents from 70.99 on Wednesday.

Wall Street suffered a major plunge overnight. Source: AP

Thursday's opening tumble follows a fall by US stocks overnight, which confirmed a correction for the Nasdaq and erased the Dow and S&P 500's gains for the year amid disappointing earnings, economic growth concerns, a spat between Italy and the European Union and the killing of a Saudi journalist.

The dive also continues the ASX's worst month in more than three years, the market now down 7.76 per cent for October, and edging closer to an 18-month low of February 2016.

Energy stocks are enduring their worst month since September 2015 and lost another 2.1 per cent in an extremely red Thursday despite flat oil prices.

Resources fell further, with giants BHP and Rio Tinto shedding 3.18 and 3.3 per cent respectively, and Fortescue Metals losing 3.89 per cent after reporting a fall in first-quarter iron ore shipments.

Only a few of the gold miners, buoyed by an uptick in gold prices, saw a bit of green early on.

The big four banks are down between 1.54 and 1.93 per cent each - the losses led by ANZ - while Macquarie Group is down 2.36 per cent.

Meanwhile, under-fire wealth manager AMP says it will sell its Australian and New Zealand wealth protection and mature businesses to London-based insurance firm Resolution Life for $3.3 billion.

Its share price was down 3.47 per cent to $3.195 following the news.

Healthcare, consumer spending, industrials and telcos are all in the doldrums.

Meanwhile Qantas says a jump in forward bookings and higher airfares has helped offset rising fuel costs for a 6.3 per cent rise in first-quarter revenue to $4.41 billion.