A stock market rout that started on Wall Street rolled through Asia, driving China's benchmark to a four-year low on Thursday and knocking down indexes in Japan, Korea and Australia.
The Shanghai Composite index plunged 5.2 per cent to its lowest level since November 2014 and Japan's Nikkei 225 fell by an unusually wide margin of almost 4 per cent. Markets across Southeast Asia recorded similar declines.
"Equity markets were pulverized today," with investors in "full out retreat," Stephen Innes of OANDA said in a commentary. The "latest sneeze" from Wall Street "could morph into a global markets pandemic," he added.
Investors are wary of possible further U.S. interest rate hikes, which will raise the cost of corporate borrowing and weigh on economic growth.
On Wednesday, President Donald Trump said the Federal Reserve "is making a mistake" with its campaign of rate increases. "I think the Fed has gone crazy," he charged.
"Equity investors are surprised by the pace at which rates have risen," said Marcella Chow, global market strategist at JP Morgan Asset Management in a report.
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Sentiment also has been dampened by the spreading US-Chinese tariff fight over Beijing's technology policy. The International Monetary Fund cut its outlook for global growth this week, citing interest rates and trade tensions.
The US Treasury is due to release a currency report that some analysts suggest might change the official stance on China's exchange rate policy.
Chow said it was unclear whether the Treasury might label Beijing a "currency manipulator" a status that could trigger penalties or whether it could be "another pre-text for the next round of tariffs."
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