A board at the New York Stock Exchange displays the final numbers.
Australian stocks wiped more than $50 billion off the value of the market today after the US House of Representatives rejected a $US700 billion ($860 billion) plan to rescue the financial system.
The S&P/ASX 200 Index fell as much as 258.3 points, or 5.4 per cent to 4643. Futures had indicated a fall as much as 7 per cent.
Shares in Macquarie Group fell as much as $5.60, or 15 per cent, to $31.60.
Babcock & Brown shares were the biggest single fall in early trade, losing as much as 35 per cent, or 82.5 cents, to $1.52.5.
Trillion-dollar US wipe-out
The US House of Representatives voted down the package overnight, sending Wall Street into a panic and driving the Dow Jones Industrial Average down a record 777.68 points - or 6.98 per cent - wiping approximately $US1.2 trillion off the market value.
The S&P/ASX 200 was down 3.35 per cent at 10.10am.
Although it's the first-ever trillion-dollar one-day loss, it does not make the top 10 greatest percentage losses. On "Black Monday", October 19, 1987, the Dow dropped by 22.61 per cent.
Mr Rudd said he had spoken to British Prime Minister Gordon Brown this morning after the US House of Representatives rejected the financial package overnight, sending the Dow into freefall.
"We are now in touch with all of our counterparts in the United States from the Australian point of view, a British point of view and the Europeans are doing the same," he said.
Treasurer Wayne Swan said the fallout could have an impact on interest rates in Australia.
"There's no doubt that events in the United States will probably put further upward pressure on borrowings but we'll just have to wait and see," Mr Swan said today.
He would not commit to the Reserve Bank of Australia intervening in local markets today and went on to repeat his belief that Australia was in a much better position than the US because of tighter regulations.
"There's a world of difference between what's going on in the United States and Australia," Mr Swan said.
The House is set to vote today on a $700 billion emergency bailout plan for the financial industry. The proposed legislation was forged during a marathon negotiating session over the weekend between lawmakers from both parties and Treasury Secretary Henry Paulson. The 110-page bill would authorize Paulson to initiate what is likely to become the biggest government bailout in US history, allowing him to spend up to $700 billion to relieve faltering banks and other firms of bad assets backed by home mortgages, which are falling into foreclosure at record rates. Democrats take charge of pushing through Bush’s bailout of Wall Street Democratic congressional leaders held a press conference late Sunday afternoon to announce agreement on a bill to hand over more than $700 billion in taxpayer funds to US banks and finance houses and press for its passage by Wednesday.
Housing crisis forcing people to sleep rough A Wesley Mission study found 71 per cent of respondents identified the housing crisis as the major reason for them becoming homeless. Of those, 88 per cent said accumulated debt and unexpected financial crisis were factors. Funding fall 'locks workers out of housing' People who cannot afford to rent or buy suitable homes have been locked out of public housing because of a drastic fall in national funding, a Sydney conference has heard.
Renters must pay for their own evictions SYDNEY renters have plenty to gripe about. Not only are their rents soaring but they are also funding the legal machinery used by landlords to evict them. NSW feels the deepest jobs cut MORE than 17,000 NSW workers left or lost their jobs last month in the worst labour market reading in years, fuelling fears the state will suffer the brunt of the coming economic slowdown. Welfare services under strain: survey The number of people accessing community services is on the rise, a new survey shows.
When pain persists, they arrive People are still angry when they lose their houses, but he notices that "people nowadays seem to think, when they take a loan, that it's a risk and that if they take the loan they might end up losing their house".
'No warning' about Beechwood collapse The New South Wales Government says it had no warning one of the state's largest building companies was about to collapse, despite receiving more than 100 complaints over three years.
Fee too much for Block project THE Aboriginal Housing Company has accused the Minister for Planning, Frank Sartor, of "trying to crucify" an ambitious housing plan for the Block in Redfern after his department refused to waive a $60,000 development application processing fee for the project.