“The yield curves are all crying timber that a recession is almost a reality and investors are tripping over themselves to get out of the way as economic recession hurts corporate earnings and stocks can drop as much as 20per cent,” Chris Rupkey, chief financial economist at MUFG Union Bank, told Reuters.
MSCI's broadest index of Asia-Pacific shares outside Japan dropped 0.9 percent in early trade. All three major US stock indexes closed down about 3 percent overnight.
Oil prices retreated early on Thursday as data showed a surprise rise in US inventories and investors feared of a world recession.
Brent crude was down 37 cents, or 0.6 percent, at $59.11 a barrel by 0300 GMT, after falling 3 percent in the last session.
US crude was down 25 cents, or 0.5 percent, at $54.98 a barrel, having dropped 3.3 percent in the previous session.
Crude inventories increased by 3.7 million barrels to 443 million, last week, compared with analyst expectations for a decrease of 2.8 million barrels, Reuters reported citing data from American Petroleum Institute (API).
Middle East markets
Egypt's blue-chip index EGX30 surged 2.5 percent on Wednesday as Commercial International Bank rose 2.8 percent, while El Sewedy Electric jumped 8.1 percent. Egypt had reported on Thursday better-than-expected inflation data for the month of July.
In Abu Dhabi the index fell 0.9 percent with First Abu Dhabi Bank sliding 0.9 percent, and investment firm Waha Capital plunging 6.9 percent after swinging to second-quarter loss.
In Dubai, the index was down 0.2 percent with blue-chip developer Emaar Properties and Dubai Islamic Bank both trading 0.6 percent lower.
Qatar's index was down 1.6 percent as Industries Qatar decreased 3.9 percent while Qatar National Bank dropped 2.9 percent.
Saudi Arabia and Oman’s stock markets will resume trading on Sunday, following Eid al-Adha holidays.
Kuwait’s premier market index added 0.4 percent while Bahrain’s index fell 0.3 percent.
The dollar edged back early on Thursday.
The dollar index .DXY, which measures the greenback against a basket of six major currencies fell 0.1 percent to 97.936.
Gold prices rose on Thursday, as investors fearing a world recession dumped risky assets for safe havens.
Spot gold was up 0.2 percent at $1,519.18 at 0313 GMT.
US gold futures gained 0.2 percent to $1,530.50 an ounce.
(Reporting by Gerard Aoun; Editing by Seban Scaria)
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