Scoreboard: Downgrade dive

European markets and Wall Street dived on a downgrade in the global growth forecast, while major currencies continued to strengthen against the greenback.

In US economic data, the JOLTS index of job openings rose from 4.67 million to a 13-year high of 4.835 million in August. The IBD economic optimism index was unchanged at 45.2 in October, while chain store sales in the latest week were up 5.4 per cent on a year ago, up from the 4.3 per cent annual gain in the previous week.

The International Monetary Fund has trimmed global growth forecasts, tipping 3.3 per cent growth in 2014 (down 0.1 percentage points) and 3.8 per cent growth in 2015 (down 0.2pp).

European shares slumped on Tuesday with investors fretting about the health of the German economy. German industrial production fell by 4 per cent in August, the biggest fall in over five years. The FTSEurofirst 300 index fell by 1.5 per cent while the UK FTSE lost 1.0 per cent and the German Dax fell by 1.3 per cent. But Australia's major miners were mixed in London trade with shares in BHP Billiton down by 0.4 per cent while Rio Tinto gained 0.8 per cent.

US sharemarkets fell sharply at the open of trade following a weak European session and shares fell further as the day progressed. The Dow Jones lost 272 points or 1.6 per cent with the S&P 500 index down by 1.5 per cent while the Nasdaq eased by almost 70 points or 1.6 per cent.

US long-term treasury prices rose on Tuesday (yields lower) in response to the downward revision in global growth forecasts and weaker sharemarkets. US Treasury sold $27 billion in three-year notes on Tuesday and will sell $21 billion in 10-year notes on Wednesday and $13 billion in 30-year bonds on Thursday. US two-year yields fell by 4 points to 0.508 per cent while US 10-year yields fell by 8 points to 2.343 per cent.

Major currencies lifted further against the greenback over European and US sessions on Tuesday. The Euro rose from lows near $US1.2585 to highs near $US1.2680, ending US trade near $US1.2665. The Aussie dollar rose from lows near US87.55c to highs around US88.30c, ending the US session near US88.15c. And the Japanese yen firmed from ¥108.95 per US dollar to ¥107.82, ending US trade near ¥107.97. 

World oil prices fell on Tuesday with investors focussed on the downward revision to global growth forecasts and the implications for oil demand. Brent crude fell by US68c or 0.7 per cent to $US92.11 a barrel while the US Nymex crude price fell by $US1.49 or 1.6 per cent a barrel to $US88.85 a barrel.

Base metal prices were mixed on Tuesday. Nickel was up the most, gaining 1.5 per cent, but tin lost 0.8 per cent. Gold lifted in response to a softer greenback with the Comex gold futures quote up by $US5.10 an ounce or 0.4 per cent to $US1,212.40 per ounce. Iron ore was up by $US1.10 on Tuesday or 1.3 per cent to $US80.00 a tonne.

Ahead: In Australia, the Reserve Bank Chart Pack is issued. In China, the HSBC services index is released at 12.45pm AEDT. In the US, the weekly mortgage market index is released.

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