Black Monday spilled over into Tuesday in the US, when stocks plummeted down in the final hour of trading.
At close, the Dow Jones was down 1.3 per cent compared to yesterday, while the Nasdaq and S&P 500 were 0.4 per cent lower and 1.4 per cent lower, respectively.
The rapid fall wiped out all gains made by US markets during morning and early afternoon trading – confidence seemed to return to investors after China announced its plan to cut interest rates, with the S&P 500 up almost three per cent at its mid-morning height.
Yesterday, an 8.5 per cent fall on the Shanghai Composite Index precipitated a global sell-off, with all European and US markets suffering huge losses. The FTSE 100 had £74bn wiped off it on Monday, while the main US indices each fell by around four per cent.
But when the People's Bank Of China said this morning that it was going to try and stabilise the economy by lowering the one-year lending benchmark rate to 4.6 per cent, stocks started heading up again.
In the UK and the rest of Europe this positive trend continued to the end of the day, with the FTSE 100 experiencing its biggest one-day gain in four years. The FTSEurofirst 300 index closed 4.4 per cent higher, while Germany's Dax index and France's CAC went up by 5.3 per cent and 4.4 per cent, respectively.
But the US has not had such luck, resulting in Wall Street's fifth consecutive day of losses.