Stocks were down across the globe (Source: Getty)
US markets continued the trend set by global markets, plummeting in mid-morning trading, with the the S&P 500 and Dow Jones both trading more than four per cent down.
That followed huge falls in Asia and Europe, with the FTSE 100 tumbling below 6,000 for the first time since 2012, while stocks in China fell as much as 8.5 per cent.
"To sum it up, fear of a global slowdown led by China is driving selling everywhere," said Peter O'Flanagan, head of foreign exchange trading at Clear Treasury.
Tech stocks were among the worst casualties, with Google falling 4.5 per cent, Yahoo dropping 7.2 per cent and Twitter falling 7.5 per cent.
Meanwhile, the FTSE 100 was down more than 300 points, or 5.2 per cent, at 5,868 points, driven by fears of a global slowdown after figures on Friday showed China's manufacturing slowdown was greater than thought.
"As expected the US open brought with it a tsunami of selling, with the Dow Jones hurtling to a 1,000-point drop in the first few minutes of the session," said Connor Cambell, financial analyst at Spreadex.
"The US markets soon stabilised, but the Dow still fell below 16,000 for the first time in nearly 18 month, and at points has threatened to post the worst one-day decline in its history.
"Things could, potentially (hopefully?), continue to calm if Dennis Lockhart is extremely dovish in his comments this evening; however, there is still a long way to go until the Atlanta Fed President speaks, with investors looking down the barrel of some pretty terrifying losses."
Some analysts, though, chose to see the upside.
"We strongly think it is nothing but a very healthy correction which many were waiting for," said Naeem Aslam, an analyst at Avatrade.
"Yes, the [Vix} volatility index surged like it was on steroids but look at gold - we have not seen any signs of world falling apart there and any upward move was very limited."