'A TOTAL BUYERS' STRIKE': The ASX tumbles to a two-year low

• The ASX200 fell more than 2% to close at its lowest level since December 13, 2016.

• A weak US lead and lingering trade fears weighed on sentiment to start the week.

• Bank stocks were hardest hit, with the ASX Financial index closing more than 3% lower.

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The Australian share market fell hard today, dragged down by the big banks.

The benchmark ASX200 closed more than 2.27% lower, posting their biggest daily percentage drop since October 25.

Among the big four banks, ANZ was the worst performer with a drop of more than 4%. The other majors were all down well in excess of 2% as the broader ASX financials sector declined by 3.12%.

It followed a poor session for US stocks on Friday night, as the S&P500 slumped into the close to cap its biggest weekly fall since March.

Chris Weston, head of research at Pepperstone, said that although global markets were weaker following Wall Street's fall on Friday, the scale of the sell-off appeared connected to some specific mounting issues in Australia.

"It feels like everyone has closed out their positions and said enough is enough for 2018," Weston told Business Insider in an email.

He noted that financial markets have moved to start pricing in the chance of an interest rate cut by the RBA next year, following surprisingly GDP data for the September quarter.

"Few want to stand in front of this market and be a hero, and it is clear that cash is king. Asia has been sold too, and that would have been a consideration but this feels like we are beating off our own issues here and moves in the rates market to price a 14% chance of a cut tell us the market feels change is upon us.

Short-term funding costs had been "trending higher and may warrant a response from the banks," Weston added.

Also affecting sentiment are the lingering tensions between China and the US. China summoned the US ambassador in Beijing over the weekend and threatened "further action" if Huawei CFO Meng Wanzhou isn't released.

"Much focus has been on the re-escalation of US-China trade tensions and the perceived slowdown in US & global growth,” said online broker CommSec.

“Weaker than expected Chinese November trade data and slower inflation, released over the weekend, is another factor towards the negativity for market participants.”

At a closing level of 5,552.5, the ASX200 registered its lowest close since it reached 5,558.80 December 13, 2016.

An ugly correction, or something worse?

Richard Coppleson, of Bell Potter, said the volatility has been so huge that it has sent even the most experienced investors to the sidelines.

"The question remains – is this the start of a bear market or just an ugly correction that market will fight its way out of," he wrote in the Coppo Report.

"I’m cautious (bearish) on 2019, but this weakness has come a lot earlier (as it tends to these days) than I thought."

There were smaller falls for the big miners, but traders hit the sell button on listed retail stocks as the ASX consumer discretionary sector fell by 2.45%.

JB Hi-Fi was down 3.6% to $22.10 while Super Retail Group and Kogan.com both fell by around 4%.

Among the fintech payment platforms, Afterpay Touch fell 5.6% to $11.97 and Zip 3.8% to $1.00.

IOOF closed more than 8% lower to $4.30 after losing 36% on Friday.

Today, Managing Director Christopher Kelaher and Chairman George Venardos stood aside while the prudential regulator seeks to have them disqualified from being superannuation trustees.

Investors headed for gold, the traditional sanctuary in bad times. Northern Star was up 2.32% to $8.46.