Australian shares sank to their lowest level since mid-June at one stage in early trade, caught up in a global stock market slide on growing fears of a second coronavirus wave, particularly in Europe.

The S&P/ASX200 benchmark index was down 46.9 points, or 0.8 per cent, to 5775.7 points at 1205 AEST on Tuesday. It earlier hit a low of 5769.8.

The All Ordinaries index fell 49 points, or 0.8 per cent, to 5964.5.

The Aussie dollar was also under pressure, buying 72.15 US cents , down from 73.14 US cents at the close on Monday.

The local market was down from the opening bell following a further decline on Wall Street, although the major indices there managed to pare earlier falls by the close.

“It remains to be seen if this marks the start to a period of extended precarious markets in the lead up to the US election,” IG Markets senior market strategist Jingyi Pan said.

Fears of a second wave of the virus hit European markets on Monday, and the local market followed the trend, regardless of Australia getting its hotspot in Victoria under control.

Market heavyweights among the miners and banks were a sea of red.

BHP was down two per cent at $36.59 and Rio Tinto was off almost three per cent at $96.47.

Among the big four, Commonwealth was 1.3 per cent lower at $62.68, ANZ fell 2.3 per cent to $16.47, NAB also down 2.3 per cent to $16.65 and Westpac declined 2.1 per cent to $16.05.

Deputy Reserve Bank governor Guy Debelle, in an address to the Australian Industry Group, has indicated lower interest rates are possible in Australia without going negative.

But he also says the economic downturn could be past its worst.

Mr Debelle said the central bank had four policy options should the economy need a further boost.

These are extending its bond buying program to longer maturing issues, foreign exchange intervention and negative interest rates.

Another option is to lower the current structure of interest rates in the economy, both in terms of the target for government bond yields and the borrowing rate the RBA offers to banks from the current 0.25 per cent.

“It is possible to further reduce these interest rates,” he said in his speech on Tuesday.

But he emphasised these were all just options.

New data on Tuesday showed payroll jobs fell 0.7 per cent for the month ending September 5.

The Australian Bureau of Statistics said over this period jobs fell by 2.1 per cent in locked-down Victoria and by 0.2 per cent over the rest of the economy.

Payroll jobs remain around 4.5 per cent lower than mid-March – 8.3 per cent lower in Victoria and 3.1 per cent lower in the rest of Australia,.

Meanwhile, consumer confidence has risen for a third straight week, with Victorians notably more upbeat that the coronavirus outbreak in the state is being brought under control.

The ANZ-Morgan consumer confidence index – a pointer to future retail spending – rose 1.2 per cent and to its highest level in three months.

In the US, the S&P 500 ended down 38.41 points, or 1.2 per cent, to 3,281.06, extending its losing streak to four days, its longest since stocks were selling off in February on recession worries.

The Dow Jones Industrial Average fell 509.72, or 1.8 per cent, to 27,147.70 and the Nasdaq composite slipped 14.48, or 0.1 per cent, to 10,778.80.