Bernard Hickey details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including news European stocks fell around 5% and US stocks fell sharply overnight as fears grow that the European and US economies are sliding back into recession at the same time as China's growth slows.
The Dow closed off its lows, but was still down 391 points or 3.5%.
The S&P 500 fell 3.2% as US banking stocks slid sharply. See more here on the global stocks rout at Bloomberg.
Moody's downgraded Bank of America, Citigroup and Wells Fargo while warning that US government support may not be as forthcoming in the future.
The US Federal Reserve's warning of growing economic risks and financial strains started the global rout in stocks and a rush in safe haven assets such as US Treasury bonds.
The Fed's Twis plan to lower long term interest rates by selling short term bonds and buying long term bonds had an unexpected consequence.
Bank shareholders worried that banks would not make so much profit in future by borrowing short term at near 0% interest rates and lending longer term at higher interest rates.
This flattening of what had previously a positive yield curve will make it harder for banks to build up their capital through generating such 'easy' profits in future.
Meanwhile, weak US jobs data and signs of slowing Chinese and European factory output also added to fears Europe and the United States will slide back into recession at the same time China's growth is slowing.
The New Zealand dollar slumped under 78 USc.
It often falls sharply when markets worry about global economic growth and demand for commodities, which are seen as the most volatile when the growth outlook changes.
The oil price fell 6% to under US$80/bbl and even the gold price fell 4% to US$1,733/oz as investors instead sought safe havens in US Treasury bonds.
The US 10 year Treasury bond yield fell below 1.7% for the first time to levels even lower than in 1941 in the depths of World War 2.
The US 30 year Treasury bond yield fell below 2.8%.
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