Aequs Securities’ Ric Klusman said falling commodity prices mean mining stocks will fall today.
“We are definitely going into a recession; there is no doubt about it,” said Mr Klusman.
The federal government guarantee on bank deposits was welcome and necessary, but “it’s really concerning.” he said.
“We are really very worried now for the local market,” Mr Klusman said.
“Today will be significant and will be a realisation of times ahead of us.”
Overnight, Wall Street fell by 8 per cent, and European shares plunged 6 to 7 per cent overnight, on fears the global economy had entered recession.
Those markets crashed after the latest data in the US showed consumers had stopped spending, and car sales plunged.
The local market followed, and at 10.37 (AEDT), the benchmark S&P/ASX200 was down 251.5 points, or 5.85 per cent, to 4048.5.
The broader All Ordinaries was down 233.1 points, or 5.46 per cent, to 4039.4 at 10.11am.
The price of oil fell over 5 per cent to $US74.54. The price of gold, silver and copper also dropped.
After those falls in commodity prices, shares in big miners led declines when the market opened.
"Our market has picked up on the fear factor this morning and there is nowhere to hide," ABN Amro Morgans private client adviser Bill Bishop said.
"The resources have had some spectacular canings this morning.''
After dramatic losses on Wall Street overnight, it was inevitable the local market would fall sharply this morning, said Mr Bishop.
"Basically it's all bad news out of America. The Beige book came out and said unemployment had risen and the country was basically in recession.
"The US Federal Reserve chairman Ben Bernanke said there may be further interest rate cuts but that the credit markets pose a significant threat.
"That was the straw that broke the camel's back in America," said Mr Bishop.
At 10.42 AEDT, the energy sector was weaker. Woodside Petroleum was $2.31 lower at $36.84, Santos had declined 95 cents to $11.95 and Oil Search had fallen 40 cents, or 10.05 per cent, to $3.58.
BHP Billiton lost $2.70, or 9.1 per cent, to $27, while rival Rio Tinto dropped $10.60, or 13.5 per cent, to $67.90.
Australian banking stocks were also down.
National Australia Bank dropped 87 cents, or 3.7 per cent, to $22.85, Commonwealth Bank fell $1.45, or 3.3 per cent, to $42.30 and ANZ Banking Group decreased 87 cents to $17.33.
Westpac sank 61 cents to $22.09 and its takeover target St George Bank lost 98 cents to $28.87. Investment firm Macquarie Group fell $2.98, or 8.6 per cent, to $31.84.
Share market down 2pc at open
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