The Australian share market has slipped in afternoon trade, after oil prices plunged more than 9 per cent on fears of a global recession and lockdowns in China that could slash demand.

The ASX 200 index was down 0.5 per cent to 6,600 points, by 1:15pm AEST.

Earlier in the day, it had swung from moderate losses (down 0.6 per cent) to modest gains (up 0.3 per cent), before erasing all its gains.

Still, it was a better-than-expected start for the local bourse, considering that SPI futures were pointing to a steep 1 per cent drop on Wednesday morning.

Many of today's best performing stocks were in the technology sector, like Zip Co (+11.8pc), EML Payments (+9.9pc), Megaport (+14.2pc), Tyro Payments (+8.7pc) and Life360 (+7.7pc).

On the flip side, gold miners like St Barbara (-7.5pc), Regis Resources (-7.3pc) and Newcrest Mining (-6.2pc) suffered heavy losses, along with Graincorp (-6.9pc), Beach Energy (-7.4pc), South32 (-7.5pc), and Woodside Energy (-6.5pc).

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Spot gold dropped 2.3 per cent to a seven-month low overnight, at $US1,767.05 an ounce.

Copper fell to $US7,670 a tonne, its lowest level in 19 months.

One reason for the sharp fall in metal prices is the US dollar, which surged to a 20-year high.

Given that commodities are priced in US dollars, a stronger greenback makes gold, copper and oil more expensive to buy.

Steep losses for Aussie dollar and euro

At its lowest point overnight, the Australian dollar sank to 67.62 US cents, its weakest level in over two years.

It last traded at 68.1 US cents on Wednesday morning, which was a steep 1 per cent drop.

The euro tumbled to its weakest level in nearly 20 years against the US greenback, on mounting concerns about a European energy crisis and recession.

The eurozone currency dropped by almost 1.8 per cent against the dollar to $US1.02 overnight, its weakest since December 2002.

"There's no investment case to be long euro right here, right now," said Chris Weston, head of research at brokerage firm Pepperstone.

He pointed to a 100 per cent rally in European gas prices in the last 16 days which he said had left the European Central Bank with a brutal juggling act.

"You've got high inflation which they need to raise rates towards but you've got a trade deficit in Germany now, and falling growth.

Meanwhile the US dollar index, which measures America's currency against a group of major currencies, jumped 1.4 per cent, after hitting its highest level since December 2002.

The US dollar is seen as a safe haven in times of acute economic uncertainty.

"The demand for the safety of dollar-based assets is up as expectations for economic activity are significantly lower," Shawn Cruz, head trading strategist at TD Ameritrade in Chicago, said.

"If people are concerned there's going to be a slowdown and put their money in the safest place and cut back on unnecessary spending, it can become a self-fulfilling prophesy."

Global market sell-off

In the Asia-Pacific, stock markets in South Korea, Japan, Hong Kong and Shanghai slumped between 1.1 and 1.4 per cent. However, New Zealand bucked the trend with a 0.8 per cent increase.

European markets dropped 2.1 per cent as soaring energy prices stoked inflation worries, while the euro sank on recession concerns.

The continent-wide Euro STOXX 600 experienced its worst session in more than two weeks, while markets in Germany, Britain and France slipped by 2.7 to 2.9 per cent.

Wall Street experienced heavy losses earlier in the session. But it managed to recover by the closing bell, thanks to a rebound in tech stocks.

The Nasdaq Composite closed 1.8 per cent higher, at 11,322 points, despite beginning its day sharply lower. The S&P 500 rose 0.2 per cent to 3,831 after suffering an intraday drop of 2 per cent.

The Dow Jones index finished trading 0.4 per cent lower at 30,968, which was still a big improvement over its 1.8 per cent drop at its lowest point.

'Panic liquidation' on oil markets

Brent crude futures plummeted by 9.5 per cent to $US102.73 a barrel overnight.

US West Texas Intermediate crude tumbled by 8.2 per cent to $US99.50 a barrel.

Both benchmarks logged their biggest daily percentage decline since March 9 and hit share prices of major oil and gas companies.

"We're getting creamed and the only way you can explain that away is fear of recession," Robert Yawger, director of energy futures at Mizuho, said.

"You're feeling the pressure."

Oil futures sank along with natural gas, gasoline and equities, which often serve as demand indicators for crude.

Meanwhile, mass COVID-19 testing in China has stoked fears about potential lockdowns that will threaten to deepen cuts to oil consumption.

Shanghai said it would begin new rounds of mass testing of its 25 million residents over a three-day period, citing an effort to trace infections linked to an outbreak at a karaoke bar.

"We're seeing some panic liquidation, lots of nervousness," Dennis Kissler, senior vice-president for trading at BOK Financial, said.

ABC/Reuters