The S&P/ASX200 index was down 79.7 points, or 1.24 per cent, at 6,356 at 1015 AEDT, reversing the gains from Tuesday when it finished up 44.2 points, or 0.69 per cent, at 6,435.7.
That result snapped a seven-day losing streak.
The broader All Ordinaries index dropped 82 points, or 1.26 per cent, to 6,429.6 as all indices fell except materials.
Materials were only marginally higher, boosted by gold stocks after the price of gold rose overnight.
US stocks fell after the US Federal Reserve announced a surprise rate cut, saying the COVID-19 virus is an evolving risk to the economy.
Fidelity International’s head of global macro, Anna Stupnytska, said the 50 basis point emergency rate cut was faster than expected.
“Four 25bp rate cuts had already been priced in by the market for this year, but the first cut was not expected to come until the scheduled meeting later this month,” she said in a research note.
“Clearly, last week’s sharp market sell-off in light of coronavirus-related anxiety and the resulting tightening in financial conditions have forced the Fed to take a pre-emptive action to reassure the market — this is a strong signal from the policymakers.”
The Australian dollar was buying 65.85 US cents at 1015 AEDT on Wednesday, up from 65.45 US cents at Tuesday’s market close.