Asian investors made a stampede for the exit on Monday, with China's Shanghai Composite index posting its biggest one-day percentage loss since 2007, as fears surrounding the health of China's economy multiplied.
"It is a key moment for China, with the equity market in free fall, the banking system increasingly starved of liquidity, rising capital outflows, and a rapidly slowing economy," IG's market analyst Angus Nicholson wrote in a note.
"The [7 percent growth] target is now looking overly ambitious and the most sensible way forward would seemingly involve further currency devaluation, further reserve requirement ratio (RRR) cuts and [elevated] fiscal stimulus," the Melbourne-based analyst added.
China-related jitters also took a toll on Wall Street last Friday, with the blue-chip Dow Jones Industrial Average and tech-heavy Nasdaq slipping into correction territory. The Dow and the S&P 500 ended 3.12 percent and 3.19 percent down respectively, while the Nasdaq Composite lost 3.5 percent. On Friday, the major averages had their biggest trade volume day of the year and posted their worst week in four years.
"We are seeing market capitulation," Daryl Liew, head of portfolio management at REYL, told CNBC. "The U.S. market came to the party last week, on the back of reasons such as the impact of China and how that's feeding into a [possible] delayed rate hike by the Fed, as well as concerns over global growth. There's also the issue of valuations in the U.S. markets."