Federal MPs from both sides of the political divide have urged Australian investors not to panic after the share market suffered a $50 billion-plus sell-off, sucked into the fall-out from Wall Street’s worst daily performance in history.

Australian shares shed over 200 points or over 3.5 per cent by late trading on Tuesday, more than doubling the sell-off of the previous day.

Wall Street slumped a record 1175.21 points, or 4.6 per cent, during its Monday session, extending Friday’s hefty drop amid inflation concerns potentially forcing a quicker pace of interest rate rises by the US Federal Reserve.

The Dow Jones tumbled more than 1500 points at one stage during a frantic trading session.

But BIS Oxford Economics’ Sarah Hunter did not see the sharemarket plunge as a signal of anything fundamentally changing.

“The growth outlook for the global economy is still good with positive momentum in most economies, and although there will be volatile days in the markets, over the course of this year we still expect equities to track higher,” she told AAP.

Treasurer Scott Morrison believed the big dive on the US stock market was a recalibration associated with recent economic data.

He told reporters in Canberra the market was reacting to last week’s US wage data and more bullish sentiment about what’s happening with inflation and its impact on bond markets.

“Markets are volatile. When they recalibrate in relation to events like this, you do see a bit of these events happening,” Mr Morrison said.

“But people who watch these markets more and participate in them more closely than I do, I think, will see this for what it is and understand the forces behind it.”

Shadow treasurer Chris Bowen said self-funded retirees who relied on their share portfolios would obviously be concerned, but people understood that share markets go up and down.

“That is the nature of the stock market. I’m sure people are keeping a close eye on it but I do think it’s important to keep it in that context,” he told Sky News.

Share market volatility aside, Trade Minister Steven Ciobo said the Australian economy was behaving “exceptionally strongly”.

“We are seeking really strong economic growth in Australia. We are seeing great employment creation,” he said.

Reserve Bank governor Philip Lowe, following the central bank’s first board meeting of the year, said he expected economic growth to pick up to above three per cent over the next couple of years – a pace not seen consistently for a number of years.