At 10:40 (AEST), the benchmark ASX 200 index was down 130.30 points or 1.91 percent at 6,703.70, while the broader All Ordinaries index was down 140.20 points or 1.97 percent at 6,965.50.
U.S. share markets plunged on Thursday as mega-cap technology shares slumped in response to rising government bond yields and profit-taking.
"The rout in global bond markets accelerated overnight, share markets finally took notice of rising interest rates, and high flying technology shares were hardest hit," CMC Markets chief market strategist Michael McCarthy said.
"The trigger for the moves was stronger US data. The rosy economic picture puts pressure on the accommodative stance of central banks around the world."
All sectors were down in the local trade, with tech stocks the hardest hit, down 7.20 percent.
In the financial space, the big banks slumped with Commonwealth Bank down 1.08 percent, National Australia Bank down 1.67 percent, Westpac Bank down 1.93 percent and ANZ down 1.57 percent.
Mining stocks plummeted with BHP down 1.59 percent, Rio Tinto down 1.51 percent, Fortescue Metals down 1.03 percent, and gold miner Newcrest down 1.30 percent.
The country's oil and gas producers slumped with Oil Search down 1.62 percent, Santos down 2.05 percent and Woodside Petroleum down 1.75 percent.
Australia's largest supermarkets tumbled with Coles down 2.12 percent, and Woolworths down 1.25 percent.
Meanwhile telecommunications giant Telstra slumped 1.26 percent, the national carrier Qantas lost altitude 1.96 percent and biomedical firm CSL plummeted 1.69 percent.
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