At the close of trade in Sydney, BHP Billiton was down $1.50 or 4 per cent, at $35.63, and Rio Tinto was down $4.49, or 6.45 per cent, at $65.10.
Santos shares were down 37 cents, or 3.22 per cent, at $11.12, while Woodside shares were $1.15 lower, or 3.4 per cent, at $32.53.
European stock index futures fell more than 2.5 percent after a slump of more than 4 percent on Asian exchanges, while commodities and emerging market currencies dived in a broad sell-off of riskier assets.
The dollar jumped to a seven-month high on the prospect of higher short-term interest rates after the Fed said it would sell $400 billion of short-term Treasury bonds to buy longer-dated debt.
In a revival of the Fed's 1961 Operation Twist bond-buying program, the Fed said overnight it would sell $US400 billion of short-term Treasury bonds to buy longer-dated debt in a widely predicted move aimed at stimulating the economy by forcing down long-term borrowing costs.
But it was the central bank's gloomy assessment of the world's biggest economy that caught investors' eyes, with oil and copper falling alongside global stockmarkets on fears of weakening demand.
Australian shares fell below the psychologically important 4000-point level today, after the US Federal Reserve warned that the world's largest economy faces a grim economic outlook and further evidence of a slowdown in China.
At the close, the S&P/ASX 200 index was down 106.9 points, or 2.6 per cent, at 3964.9, plumbing its lowest level in more than two years. The broader All Ordinaries dropped 106.9 points, or 2.6 per cent, to 4047.9.
Emerging Asian equities have underperformed U.S. stocks since the August falls, with the MSCI Asia ex-Japan index now nearly 25 percent below its 2011 high in April and Wall Street's S&P 500 down 15 percent from its peak in May.
Shayne Heffernan oversees the management of funds for institutions and high net worth individuals.
Shayne Heffernan holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services. www.livetradingnews.com