The Australian dollar has slipped to a six-year low, as China’s financial instability continues its domino effect throughout international stocks.
World oil prices tumbled, while European and US stocks sunk, continuing a horror month for international markets.
Poor factory data released by Chinese authorities on Tuesday was further indication the world’s second-largest economy stalled in August.
The purchasing managers index (PMI) slumped to a three-year low of 49.7 last month, indicating contraction, Sky News reported.
It sparked a drop in US stocks on Tuesday, with the Dow Jones finishing 2.84 per cent lower on 16,058.35 points. The broader S&P 500 plunged 58.33 points to 1,913.85, and the Nasdaq Composite gave up 2.94 per cent at 4,636.10.
Some analysts indicated it could be a while before the markets stabilise.
“You rarely get a V-shaped bottom,” US Bank private client reserve chief investment officer John De Clue told the New York Times.
“You usually bounce around for a while.”
In Europe, the FTSE index also experienced losses on Tuesday, dropping 3.03 per cent to close at 6,058.54 points.
In the eurozone, the CAC 40 in Paris dropped 2.40 per cent to finish at 4,541.16 points, while Frankfurt’s DAX 30 fell 2.38 per cent to end at 10,015.57 points.
Elsewhere, it was a mixed story across the market.
Crude oil resumed its volatility after a three-day rally saw the price of West Texas Intermediate rise by 30 per cent, recovering much of its August losses.
On Tuesday, it closed down $US3.79, or 7.7 per cent, closing at $US45.41 a barrel.
Despite solid August sales automakers experienced losses, while although the US manufacturing PMI came in at 53 – down from July figures.
Large tech shares also tumbled hard – Apple lost 4.3 per cent, Google 3.3 per cent and Amazon 3.2 percent.
Bond prices were mixed.
The yield on the 10-year US Treasury slipped to 2.17 per cent from 2.20 per cent Monday while the 30-year was flat at 2.93 per cent. Bond prices and yields move inversely.
China encouraged listed companies to merge and restructure on Monday, to help alleviate volatility in the market.
The volatility was sparked by Shanghai’s move to devalue the yuan in early August, after decades of tight control by the People’s Bank of China.