Asian shares and global stock futures tumbled on Wednesday while oil prices hit multi-month lows as a sharp tech sell-off on Wall Street and resurgent worries about US growth drove investors out of risky assets.
Japan's Nikkei index led the slump in Asia, falling more than 3 per cent, while MSCI's broadest index of Asia-Pacific shares outside Japan lost 1.6 per cent in early trade.
September has historically been a bad month for stocks, although analysts pointed to a confluence of factors behind the rout, including tepid US manufacturing data.
Wall Street closed far lower overnight after the US returned from a holiday at the start of the week, with tech darling Nvidia tumbling nearly 10 per cent as investors reined in their enthusiasm for artificial intelligence.
head of macro research, Mizuho Bank
"The air of portfolio de-risking as the US cranked back up after the Labour Day holiday was seen across all areas within the capital markets," said Chris Weston, head of research at Pepperstone. "Growth concerns were the key theme on the day, with cyclical-sensitive assets smacked and hedges laid down aggressively."
US stock futures extended declines on Wednesday, with S&P 500 futures easing 0.5 per cent, while Nasdaq futures shed 0.75 per cent. EURO STOXX 50 futures slumped more than 1 per cent and FTSE futures declined 0.73 per cent.
"[There] was plenty of blame to go around. Nvidia, tech, soft spots in US data, China gloom," said Vishnu Varathan, head of macro research for Asia ex-Japan at Mizuho Bank.
Recent data from China pointed to an economy that is still struggling to mount a solid recovery, raising calls for further stimulus from Beijing. Worries over the sluggish outlook in China – the world's biggest oil importer – have further exacerbated the decline in oil prices due to expectations of weakening demand.
Oil slump linked to oversupply
Brent crude futures bottomed at $73.32 a barrel on Wednesday while US crude hit a trough of $69.83 – both their lowest levels since December. They had fallen more than 4 per cent in the previous session.
Elsewhere, stocks in Hong Kong opened lower, in line with regional peers, with the Hang Seng Index last down 0.8 per cent. China's CSI 300 blue-chip index lost 0.6 per cent.
A slew of US economic data is due this week, including figures on job openings, jobless claims and the closely watched nonfarm payrolls report, which is out on Friday. Given the Federal Reserve's labour market focus, Friday's release could decide whether a rate cut expected this month will be regular or supersized.
"Everyone's been cheering on the idea of rate cuts, but the idea of having a rate cut isn't a great thing because it means things are worse economically than what might have been the case," said Tony Sycamore, a market analyst at IG.
Ahead of the release, moves in currencies and US Treasuries were less dramatic than those recorded in equities, although safe-haven currencies such as the US dollar and the yen were buoyed by safety bids.
The yen was last steady at 145.43 per dollar, while a rebound in the greenback pushed the euro farther from a 13-month high. The common currency last bought $1.1054. Sterling fell 0.08 per cent to $1.3105.
"I think it looks a little bit treacherous, the week ahead," Mr Sycamore said.
The benchmark 10-year US Treasury yield eased a little and was last at 3.8348 per cent, while the two-year yield was last at 3.8672 per cent. In commodities, spot gold rose 0.04 per cent to $2,493.85 an ounce.
