Asian markets plunged Thursday morning following the worst session on Wall Street for months, as US President Donald Trump said the Federal Reserve had "gone crazy" with plans for higher interest rates.
The benchmark Nikkei 225, the Hang Seng in Hong Kong and the Shanghai Composite all plummeted more than three per cent in early morning trade, as investors fretted about surging interest rates and an ongoing trade war.
"All bets are off," warned Stephen Innes, head of trading at OANDA, adding that the markets "are fraught with peril." "The US equity bloodbath is taking no prisoners in Asia as a sea of red greets investors at the open, as equity deleveraging and liquidation intensifies," he said.
Taiwan plunged nearly six per cent, with Seoul down three per cent and Sydney and Singapore both falling two per cent.
The steep drop in Asia followed a decline on Wall Street of nearly 830 points, the biggest fall since February, amid Trump's latest criticism of the Federal Reserve, the US central bank.
The rout in US shares followed substantial losses on European bourses, due in part to tensions between Brussels and Rome over Italian budget plans that have revived fears about the eurozone.
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Bourses in Paris and Frankfurt both lost more than two per cent, while London fell 1.3 per cent.
"The selling is not panicking but it's persistent," Briefing.com analyst Patrick O'Hare said of the proceedings. "It's all about investors rethinking their exposure to stocks." Many of the biggest US names fell hard in Wednesday's session, with Apple, Boeing and Facebook all slumping more than four per cent and Amazon, Nike and Microsoft shedding more than five per cent.
Stocks have been under pressure since the yield on 10-year US Treasury bonds jumped above three percent last week, a sudden move that raised fears of an overheating economy, speeding inflation and more aggressive Federal Reserve interest rate increases.
Last week's jump in yields followed strong US data but many analysts have been anticipating a change in the dynamics in the bond market due to expectations that central banks in Europe and Japan will soon phase out bond-buying programmes.
"It's shifting the tectonic plates," said Jack Ablin, chief investment officer at Cresset Wealth Advisors. The turmoil on stock markets came a day after the International Monetary Fund slashed its global growth forecast on worries about trade wars and weakness in emerging markets.
In other markets, oil prices fell sharply on worries that Hurricane Michael, which is battering the US state of Florida, will dent demand for gasoline and other petroleum products.
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