In the US, the Dow Jones industrial average lost nearly 700 points or eight per cent on Monday, wiping out more than half of last week's big gains amid a litany of bad economic indicators confirming that the US economy was in recession.
The US National Bureau of Economic Research, a private non-profit group of economic analysts, concluded that the country's 73-month economic expansion had come to an end in December 2007.
The bureau did not forecast the duration of the recession.
"There is significant weakness in resources. The fact that [the] US has called a recession ... highlights the concerns for global economy," Savanth Sebastian, an equities economist with Commsec, said.
The White House acknowledged the report but did not refer to the current economic crisis as a recession.
In Australia, the central bank slashed interest rates on Tuesday by one percentage point in another attempt to stave off a recession.
The reduction was the fourth in a row by the Reserve Bank of Australia and took the cash rate to 4.25 per cent.
Analysts had expected a 0.75 percentage point cut on Tuesday.