In Europe, markets were down with the Euro Stoxx almost 3.5% lower. The French CAC 40 and Germany’s DAX were also down more than 3%.
European shares closed sharply lower as Autos and mining companies slumped with news about Volkswagen AG’s unfolding emission-test scandal and worries about global growth which weighed on investor confidence in Europe.
Volkswagen fell a staggering 19 percent, its biggest slump since 2011 following statements regarding irregularities on diesel-output readings. The scandal extends to 11 million vehicles around the world. Following this, VW has set aside 6.5 billion euros as a provision to cover the costs to be incurred; however, the extremely negative thing about it is that you cannot quantify the overall costs and penalties for VW and the rest of the industry immediately.
VW Shares have lost 34 percent since its admission of cheating on U.S. air-pollution tests. PSA Peugeot Citroen SA also fell 8.2 percent after France’s finance minister called for a European investigation of the industry.
Mining companies also slumped on Tuesday as basic resources firms face a sell-off after copper prices took a hit on concerns about a global surplus of the industrial metal.
Commodity producers from coal to zinc also slid amid investor concern about China’s economic slowdown.
The STOXX Europe 600 Basic Resources index dropped 5 percent, the second largest sectoral faller, dragged down by Rio Tinto, BHP Billiton, Glencore, Anglo American and Antofagasta. Glencore and Antofagasta were the biggest losers, falling 10% and 7.5% respectively.
The European mining index has slumped about 25 percent so far this year mainly on concerns about the pace of economic growth in China, the world’s biggest metals consumer, prices of major industrial metals such as copper, aluminium and nickel have fallen sharply on the back of growth concerns this year.
On Wall Street, stocks fell more than 1.5% on Tuesday, following the European markets due to the decline in commodity prices and also continuing uncertainty about when the Federal Reserve will raise interest rates.
The S&P 500 was down 1.5 percent and the Nasdaq composite was down 2 percent.
Copper prices hit a three-week low, while oil was down more than 2 percent on persistent worries about demand, especially in China. The Fed last week kept rates at near-zero levels, citing the turbulence in a tightly linked global economy, including slowing growth in China. However Atlanta Fed President said a rate hike later this year was still possible, Fed Chair Janet Yellen speaks on Thursday.
Apple was down 1.8 percent at $113.15 and was the biggest drag on the S&P and the Nasdaq.
Goldman Sachs was the biggest loser as the company fell 2.8 percent and was the biggest loss on the Dow after Chief Executive Lloyd Blankfein stated that he had a "highly curable" form of lymphoma.
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