European markets turned sour overnight with concerns now directed at Credit Suisse whose shares plunged 24 per cent to a record low.

In the UK, the FTSE fell 3.8 per cent and Germany’s Dax was down 3 per cent while the US Dow Jones was down less than a per cent. In Australia, the ASX dived 130 points when the markets opened.

“There’s no buyers really,” Pepperstone head of research Chris Weston said on Ausbiz TV.

“There’s a lot of questions (about banks globally) … and we don’t know the answers at the moment. And when we do that we sell and de-risk and we de-leverage our portfolios, and that’s exactly what we’re seeing at the moment.”

The Swiss central bank said it would provide a backstop to Credit Suisse, whose shares plunged after it announced it had found “weakness” with its financial reporting.

Every sector of the ASX was in the red in the first hour of trade, with financials and tech down by a bit more than two per cent, and energy and materials down by more than three per cent.

Swiss regulators sought to stem talk of a contagion.

“There are no indications of a direct risk of contagion for Swiss institutions due to the current turmoil in the US banking market,” the Swiss National Bank and Swiss Financial Market Supervisory Authority said in a joint statement.

The ANZ said this morning that futures were pricing implied three US Federal Reserve funds rate cuts by year end and only a 37 per cent probability that the Fed would hike rates at next week’s meeting.

“Financial stability concerns are dominating everything at present and regulators and central banks will need to ensure that order is restored soon,” ANZ said in its morning focus note to investors.

Deloitte’s Dave Rumbens said the dramatic events stemming from the collapse of the Silicon Valley Bank highlighted the risks involved when interest rates rise rapidly.

He said the US Fed would have to recalibrate its tightening of monetary policy.

“In Australia, financial markets have reacted by greatly reducing their expectation of an interest rate rise in April from close to 50 per cent at the start of March to zero per cent today,” Rumbens said.

“However we get there, a pause in interest rate rises could be a good thing for the Australian economy.

“Not only have we had 10 interest rate rises in a row and the Australian economy has shifted to a lower growth path, but the full impact of those rate hikes has not yet been felt _ the so-called mortgage cliff.”

That refers to the large number of fixed rate mortgages that would end this year forcing borrowers into a much higher interest rate environment than the one they entered.

He said that was likely to impact 1 million households and could be worth about $21 billion.

However, Labour figures released today showed Australia’s unemployment fell back to 3.5 per cent, a relatively strong result and slightly better than market expectations.

That may mean the Reserve Bank shelves any concerns about the contagion and lifts rates again.

Additional reporting: AAP