What you need2know

SPI futures down 32pts to 5746

AUD at 77.35 US cents, 95.18 Japanese yen, 71.14 Euro cents andf 50.28 British pence.

On Wall St, S&P 500 -1%, Dow -1%, Nasdaq -1.1%

In Europe, Stoxx 50 -1%, FTSE -1.2%, CAC -0.7%, Dax -1.6%

Spot gold down $US18.88, or 1.6% to $US1187.72 an ounce

Brent crude down $US1.70, or 2.6% to $US63.82 a barrel

Ironm ore jumped 2.6% to $US62.78 per ton

What's on today

Australia construction work done, Westpac leading index, speech by Reserve Bank deputy governor Philip Lowe

Stocks in focus

RBC Capital Markets has cut Sirius Resources to "sector perform" from "outperform" with a price target of $4.50 after Independence Group launched an agreed bid for Sirius valuing it at $1.6 billion, or $3.92 a share.

Deutsche Bank has a "buy" on Evolution Mining and a price target of $1.05 a share after EVN said it will acquire the Cowal gold mine from Barrick Gold for $US550 million.

Credit Suisse upgraded Coca-Cola Amatil to "neutral" from "underperform" with a target price at $10.60.

Currencies

China's currency is at a level that is "no longer undervalued," according to the International Monetary Fund.

The greenback climbed more than 1 per cent against other major currencies, extending recent gains on upbeat data that lifted expectations the Federal Reserve will start raising US interest rates in 2015. The US dollar climbed to its highest in nearly eight years against the Japanese yen and pushed the euro, already weighed down by anxieties over Greece's financial crisis, below $US1.09 for the first time in a month.

Commodities

Ore with 62 per cent iron content at China's Qingdao Port rose 2.6 per cent to $US62.78 a dry ton on Tuesday, according to an index compiled by Metal Bulletin.

Copper hit a three-week low, as a strong dollar spurred profit-taking and overshadowed hopes that demand from top consumer China will recover, thanks in part to government stimulus measures. Three-month LME copper cut early gains to close down 0.9pc at $US6106.50 a tonne.

ANZ said three of its four bullish indicators had turned positive for nickel, including a drawdown in Chinese stores of nickel pig iron (NPI), rising ferrronickel imports and higher NPI prices, but it remained cautious on the outlook. "If LME nickel stocks start to decline, we would have greater confidence that the market had found a bottom," the bank said.

United States

US stocks fell the most in three weeks, as better-than-forecast economic data and comments by Federal Reserve officials bolstered bets for an interest-rate increase this year. The Dow Jones Industrial Average ended a six-session stretch without a 100-point intraday swing, the longest in almost a year.

"The looming Fed change is always out there," said Richard Sichel, chief investment officer at Philadelphia Trust Co, which oversees $US2 billion. "You have a couple of items that could be considered good, things are looking better, the dollar is strong, basically it's working against the market at the moment."

Better-than-estimated increases in capital goods orders topped the latest data. Purchases of new homes rose more than projected in April, and a separate report showed home prices increased at a faster pace than forecast in the year through March. A gauge on May consumer confidence also advanced more than estimated.

Economists expect the Fed to increase rates in September, according to a Bloomberg survey.

Europe

European stock markets stumbled on Tuesday as Greece's debt problems and a battering for Spain's government in local elections offset a rise in airline shares.

Irish airline Ryanair surged 5.4 per cent after posting higher profits. Its rival Aer Lingus also rose after Ireland's prime minister said the government would discuss the sale of its stake in the airline.

Greece's main ATG equity index recovered slightly from a 3.1 per cent fall on Monday to rise 1.1 per cent, but the index has made zero gains since the start of 2015, underperforming rallies on other European stock markets. Greece and its Europeans creditors on Tuesday sought to play down fears that Athens would default on a payment to the International Monetary Fund next week

What happened yesterday

Talk of interest in Fortescue from a strategic Chinese investor has boosted the miner's share price, leading the local market higher. The S&P/ASX 200 Index gained 51.9 points, or 0.91pc, to 5773.4 on Tuesday.