A sharp drop in Chinese stocks led global markets broadly lower on Tuesday, as investors digest the impact of trade tensions on the country as well as other geopolitical worries, such as Italy's debt problems.
After the Shanghai index closed down 2.3 percent at 2,594.83, European markets traded lower. Germany's DAX slipped 1.8 percent to 11,321 and France's CAC 40 was 1.3 percent lower at 4,990. Britain's FTSE 100 lost 0.7 percent to 6,991.
Wall Street is forecast to open lower, with the future for the S&P 500 down 1.1 percent and the Dow future off by 1 percent.
Traders appear to be weighing anew the impact of increased tariffs on most Chinese goods sold to the U.S., ranging from soybeans to electric cars and whiskey. Recent data showed China's economy grew at a 6.5 percent annual pace in the third quarter, its slowest since 2009.
Hong Kong's Hang Seng index sank 3.1 percent to 25,346.55. Japan's Nikkei 225 index gave up 2.7 percent to 22,010.78 and the Kospi in South Korea tumbled 2.6 percent to 2,106.10. Australia's S&P-ASX 200 dipped 1.1 percent to 5,843.10.
Margaret Yang, market analyst at CMC Markets in Singapore, said "investors are starting to price in weaker-than-expected third quarter GDP readings amid intensified trade frictions."
Several large U.S. businesses, which are due to report third quarter earnings later in the day, could either provide markets with much-needed tail winds or rock them further.
Underperformance by companies like Caterpillar, 3M and Verizon could be taken as a sign that rising interest rates, inflation and trade disputes are weighing on the global outlook.
In Europe, the focus was on Italy's dispute with the European Union over its plan to ramp up public spending. The plan expands its targeted deficit to 2.4 percent of GDP next year, three times more than promised by the previous government.
The European Union is worried that this would prevent Italy from lowering its debt, which is second only to Greece among its members.
International credit rating agency Moody's has downgraded Italy's credit ratings in response.
Dow Jones Industrial Average futures indicated a decline of more than 260 points at the open while S&P 500 and Nasdaq 100 futures also fell sharply. After its fourth straight daily decline on Monday, the S&P 500 sits less than 2 percent away from the low hit earlier this month during this ongoing sell-off.
European and Asian shares retreated on Tuesday as sentiment soured amid the escalating geopolitical worries. Europe’s Stoxx 600 fell to its lowest level since December 2016 in early morning trade, with concerns over Italy’s fiscal plans and Brexit also depressing sentiment, while Asian markets saw broad losses.