Seven-year highs in US 10-year bond yields have spooked share investors. (Reuters: Brendan McDermid)
Australian shares are expected to fall in early trade, continuing their downward trajectory from the last two days.
Meanwhile, the Australian dollar has rebounded to just above 71 US cents.
Currency strategists had been expecting the local currency to continue falling towards the 70 US cents mark.
Markets at 7:30am (AEST):
- ASX SPI 200 -0.1pc at 6,020, ASX 200 (Monday’s close) -1pc at 6,041
- AUD: 71.03 US cents, 54.02 British pence, 61.79 Euro cents, 80.25 Japanese yen, $NZ1.10
- US: Dow Jones -0.2pc at 26,431, S&P 500 -0.1pc at 2,880, Nasdaq flat at 7,738
- Europe: FTSE +0.1pc at 7,238, DAX +0.3pc at 11,977, CAC +0.4pc at 5,319, Euro Stoxx 50 +0.4pc at 3,322
- Commodities: Brent crude +1.7pc at $US85.31/barrel, spot gold flat at $US1,187.95/ounce, iron ore +2.5pc at $US71.14/tonne.
It was another negative session on Wall Street as investors, worried about global growth prospects, fled from materials and industrial stocks.
The International Monetary Fund cut global economic growth forecasts for 2018 and 2019 due to the impact of the trade war between Beijing and Washington.
The IMF also downgraded its growth estimates for the US and China, saying the two countries would feel the brunt of their trade war next year.
US President Donald Trump repeated a threat to impose tariffs on $US267 billion worth of additional Chinese imports if Beijing retaliates for the recent levies imposed by his administration.
Furthermore, interest rates for American 10-year bonds reached their highest level in seven years, triggering a sell-off in global markets over the past week. But they fell slightly to 3.21 per cent overnight, which kept US share market losses in check.
The industrial-skewed Dow Jones index closed 0.2 per cent lower at 26,431 — after a volatile trading session, swinging between positive and negative territory.
The benchmark S&P 500 lost 0.1 per cent to 2,880, marking its fourth straight day of losses.
However, the Nasdaq closed slightly higher, though still practically flat, at 7,738.
The technology-heavy index was kept afloat by a rebound in technology stocks, particularly Facebook (+0.4pc), Amazon (+0.3pc), Netflix (+1.9pc) and Apple (+1.4pc).