Yesterday morning, Morgan Stanley declared that the “dead cat bounce is over. One day later, the bank’s thesis was confirmed with global markets a sea of red on Tuesday, as a violent rout in Asia carried over into Europe, slamming tech and industrial stocks, and crossing the Atlantic, sending US equity futures retesting the lowest level hit during the October 10/11 two-day rout.

An ugly start to European trading pushed world shares towards their lowest level in a year on Tuesday, as negative drivers from Saudi Arabia’s diplomatic isolation to worries about Italy’s finances, trade wars and a slew of ugly earnings piled on the pressure.

Selling escalated from Wall Street into a heavy selloff in Asia before hitting Europe, which was facing a fifth day of uninterrupted declines.

One day after relentless Chinese jawboning sent the Shanghai Composite surging 4.1%, its biggest gain in two years, Chinese stocks resumed their slide as traders overpowered Beijing much to the surprise of professional traders, especially after Beijing announced fresh measures to ease the funding strains of private companies, as top officials – including president Xi – sought to restore confidence in the world’s second-largest economy. The State Council announced it would support bond financing by private firms, and said the central bank will provide funding to facilitate this. It was not enough however, and the Shanghai Composite resumed its slide, dropping 2.3% overnight and reversing more than half of Monday’s gain, while China’s CSI300 tumbled 2.7%.

The sudden, sharp moves in Chinese stocks in either direction have made the Shanghai Composite the most volatile world index, as vol spiked to the highest level since March 2016.

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