By Greg Peel

The Dow fell 265 points, or 1.8%, while the S&P lost 2.3% to 1552 and the Nasdaq dropped 2.4%.

Bombs have exploded near the finish line of the Boston Marathon, the world's most popular annual marathon event attracting in excess of 20,000 entrants and many more thousands of onlookers. Terrorism is assumed. The explosions occurred just before 3pm New York time, with an hour left to trade on Wall Street.

This devastating news is not, nevertheless, the explanation for the big fall on Wall Street or a massive plunge in gold, both of which had played out before news of the bombing came through. For Wall Street, the fall mimicked the sell-off in Australia yesterday on the release of the weak Chinese GDP. For gold, the bubble has burst.

China's March quarter GDP fell to 7.7% annualised growth from 7.9% in the December quarter when economists had expected 8.0%. While the difference in numbers appears small, psychologically the result is a blow to a world previously assuming the Chinese economy had turned the corner in the December quarter back to a stable growth path after two years of unsettling slowdown.

In the month of March, industrial production grew 8.9%, down from 9.9% for the January-February combined data and below 10% expectation. Retail sales fared slightly better, rising to 12.6% in March from Jan-Feb's 12.3%, albeit below the 15.5% result posted in December. Fixed asset investment for the March quarter rose 20.9% when 21.2% growth was posted for Jan-Feb. This number is nevertheless an improvement on 20.6% average investment growth across 2012.

Unsurprisingly, commodity prices felt the full force of global disappointment. Aluminium fell 1%, lead and zinc 2%, nickel 3%, copper 4% and tin 6%. The oils both fell over 3%, with Brent down US$3.81 to US$100.39/bbl and West Texas down US$3.07 to US$88.22/bbl. Spot iron ore fell US10c to US$140.90/t.

The Aussie has plummeted since yesterday morning, falling two and a half cents to US$1.0314. But the most devastating move was in gold.

From its close on Saturday morning to its close this morning, spot gold has fallen US$215.20 or 14%. It is the biggest one-day percentage fall since February 1983, the biggest dollar fall since January 1980, and the lowest close for the metal since February 2011.

The fall in gold is not about China's GDP. One could make a case that a weaker Chinese economy means less jewellery demand from one of the world's leading consumers, but gold was already on the slide on Friday. Last night it hit the oil on the slope. The herd has exited in spectacular fashion following a combination of prompts ? Goldman Sachs' forecast downgrade, Cyprus' announcement it would sell its reserves, alarming outflows this month from ETF holdings and a build-up in short positions on Comex. Even the news of the Boston bombing could not arrest the stampede. Nervousness has been present for a while amongst gold holders after endless forecasts of US$2000 based on massive global money printing have failed to play out.

Between the fall in gold and the fall in base metal prices comes a 17% fall in precious/industrial metal silver.

The Chinese data were sufficient impetus for the sort of fall on Wall Street many have been calling for this year. Adding to the dour mood were two US economic releases. The NAHB housing sentiment index for April fell to 42 from 44 in March, while the Empire State manufacturing index fell to 3.1 from 9.2 when economists were expecting 7.8.

There was no late buying run last night on Wall Street as has been the trend all year. By the last half hour on the NYSE it was pretty clear to all a fresh terrorist attack had been perpetrated on US soil. This will likely prove the "black swan" event that many have suggested could derail what appeared to be overblown equity enthusiasm across the globe. No black swans are welcome, but this one is particularly dreadful.

The VIX volatility index for Wall Street had shot up 43% by the close. This is a big jump, but only takes the index to above 17, which is not normally considered a level of fear.

The Australian market took its own bath yesterday and would have anticipated a fall on Wall Street. But the picture is now very different, and very uncertain. The SPI Overnight is down 63 points, or 1.3%.

Many have been looking for a correction in equity markets to provide an opportunity to buy at more attractive levels. This event will not bring in buyers until the level of immediate panic subsides.

Our hearts go out to Boston.

Rudi will appear on Sky Business today at 5.30pm.