More than $27 billion was wiped off Australian shares on Monday after the prospect of higher US interest rates drove the Aussie dollar down, undermined commodity prices and cut the chances of another reduction to the cash rate.
The broad-based sell-off bucked the regional trend, with equity markets in China and Japan posting strong gains for the day, and the smaller markets of south-east Asia in the red but not as deep as Australia's S&P/ASX 200, which lost 95.5 points, or 1.8 per cent, to 5119.5.
It was a ominous start to the week after two consecutive weeks of net market losses, despite a 4.3 per cent increase over   October. 
Equity analysts ascribed Monday's decline to a perfect storm of global and local factors, starting with robust US jobs data over the weekend that strengthened the case for the US central bank to start lifting interest rates for the first time in almost a decade.
This pushed the Aussie down and also the price of most commodities, including iron ore, Australia's biggest export. It dropped 1 per cent, to $US48.21 per tonne.
Foreign investors, spooked by further declines in the Australian dollar, also yanked money out of the local market, fearing further currency losses on their investments.
Banks are already under pressure because of a cooling housing market and the threat of rising wholesale financing costs could squeeze their profit margins further, said analysts.
The fall in the currency "was a large part, certainly" of the sell-off, said Alistair McCorquodale, private client advisor at Morgans.
"That is why an offshore seller would sell the Australian banks  - to protect themselves against a further drop in the currency," he said.
Russell Investments' Graham Harman argued it wasn't the weaker Aussie, but the fading chances of another rate cut by the RBA that dented confidence in equities.
"I'd say that the Fed lifting in   December is negative for the Aussie dollar, which is not bad news for the Aussie sharemarket," he said.
"What's changed in the last while is a fall in the likelihood of a rate cut in Australia.
"The market has reduced the odds of a rate cut by the end of this year to 18 per cent," he said.
Aside from greenback-linked price slides, resource companies were also hit by details of a $2.5 billion capital raising at Santos, and mounting pressure on BHP after the fatal collapse of two tailing dams at its Samarco mine in southeast Brazil on Thursday.
Although the resulting production cuts could help the flailing iron ore price, investors are concerned about the cost to the mining giant of the disaster, which has left dozens of people unaccounted for. 
BHP shares closed down 5.6 per cent, while Santos was off 1.6 per cent.
Peak Asset Management executive director Niv Dagan said Monday's job advertising data from ANZ were also below expectations, and this fed into broader concerns about the Australian economy.
"We've also got the employment figures coming up on Thursday," he said, "so I think investors are really worried about the jobs growth in Australia overall."
He said despite the US recovery, the possibility of further monetary stimulus in Europe, Japan and China suggested global demand wasn't really picking up, and this was bad news for exporting nations.
"If global growth is slowing, and you have a pick-up in US interest rates coming, whether it be in   December or the first quarter next year, you are seeing commodities and the Australian dollar under pressure," he said.
With Stephen Cauchi