Asian stocks fell today on signs of further deterioration in the US economy, a fresh record high in oil prices, and heightened fears that stagflation will continue to damage company earnings and consumer spending.
Japan's Nikkei share index slipped for the 11th consecutive day, on track for the longest losing streak in a half century, after the Dow Jones industrial average sank into bear market territory overnight, closing more than 20 per cent below its October peak.
The dollar fell to a two-month low against the euro after a report yesterday showed US private employers cut the most jobs in nearly six years.
The euro, by contrast, was supported by expectations that the European Central Bank will later in the day raise its benchmark interest rate for the first time in a year.
Investors will focus on whether ECB policymakers will hint that borrowing costs will have to rise further to fight inflation despite a global economy that is growing below its long-term trend.
Weakness was by no means unique to Japanese stocks in the midst of a toxic mix of rising inflation and slowing growth known as stagflation.
The MSCI index of Asia-Pacific shares traded outside of Japan fell 1.2 per cent to the lowest since a blowup in the US subprime mortgage sector turned into a global credit crisis 10 months ago.
The benchmark MSCI pan-Asia index was down 0.6 per cent. It has fallen about 22 per cent since hitting an all-time high in November; a drop of 20 per cent or more from market highs usually is defined as a bear market.
Hong Kong's Hang Seng index fell 0.9 per cent, with Ping An Insurance one of the biggest drags on the market as investors dumped the stock on rumours of a tax probe, despite assurances from the company.
Australia's S&P/ASX 200 index fell more than 2 per cent to a 21-month low, weighed down by the mining sector on concerns that slowing global economic growth will hurt demand for commodities and following a slump in coal prices.