Investing.com - Asian shares were mixed with Shanghai recovering on Tuesday as investors noted a pickup in sentiment for leading shares after a morning drop.
The Shanghai Composite rose 0.41%, while the S&P/ASX 200 dipped 1.63% and the Nikkei 225 eased 0.26%.
Overnight, U.S. stocks fell sharply on Monday amid weak manufacturing data in China as the spillover effects from a crash in the Shanghai Composite Index weighed on domestic equities, contributing to one of the worst starts to a year by the Dow Jones Industrial Average since 1932.
At session lows on Monday, the Dow fell as much as 450 points after the China Caixin PMI index fell by 0.4 points to 48.2 in December, marking the 10th straight month of contractions in the Chinese manufacturing sector. The continued weakness in China manufacturing exacerbates fears of slowing growth in the world's second-largest economy, amid signals that Chinese annual GDP expansion could fall below 7% for the first time in more than a decade.
As a result, the Dow closed at 17,148.94, down 276.09 or 1.58% on the session extending losses from last week when it ended 2015 in negative territory, its first losing year since 2008. The NASDAQ Composite index and the S&P 500 Composite index also fell sharply on Monday, suffering one of their worst sessions over the last three months. The NASDAQ lost 104.32 or 2.08% to 4,903.09, while the S&P 500 dipped by 31.28 or 1.53% to 2,012.66, as all 10 sectors closed in the red. Stocks in the Health Care, Financials and Consumer Services industries lagged, each falling by more than 1.75% on the session.
Investors also reacted to a volatile day of trading in energy markets after a host of nations joined Saudi Arabia in cutting diplomatic ties with Iran. The escalation of Islamic sectarian discord in the Middle East weighs heavily on crude prices, which is sensitive to heightened geopolitical tension in the region.