At 10:30 (AEST), the benchmark ASX 200 index lost 47.10 points, or 0.70 percent, to 6,698.80, while the broader All Ordinaries index was down 45.50 points, or 0.67 percent, at 6,700.40.
U.S. share markets fell on Thursday, with the Dow Jones fell 0.50 percent, the S&P 500 lost 1.50 percent and the Nasdaq dropped 3 percent.
"Markets continued to chew over the U.S. Federal Reserve's accommodative stance, and seemed to conclude that leniency on inflation this year means tighter monetary policy down the track," CMC Markets chief market strategist Michael McCarthy said.
"The combination of weaker sentiment and growing concerns that new European lockdowns will weigh on demand saw oil markets trounced."
On the local bourse, energy names were leading local market falls, which were down 2.74 percent. Information technology and materials also lost more than 1.50 percent.
In the financial space, the big banks were mixed with Commonwealth Bank down (0.32 percent), National Australia Bank up (0.04 percent), Westpac Bank down (0.08 percent) and ANZ unchanged.
Mining stocks slumped with BHP down (1.71 percent), Rio Tinto down (0.92 percent), Fortescue Metals down (0.57 percent), and gold miner Newcrest down (0.80 percent).
The country's oil and gas producers plummeted with Oil Search down (2.90 percent), Santos down (2.87 percent) and Woodside Petroleum down (3.17 percent).
Australia's largest supermarkets slipped with Coles down (0.32 percent), and Woolworths down (0.41 percent).
Meanwhile telecommunications giant Telstra edged higher (0.16 percent), the national carrier Qantas was unchanged and biomedical firm CSL slumped (1.12 percent).
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