Stocks have fallen across a number of major markets, with fresh problems at Credit Suisse rekindling fears of a banking meltdown. Investors purchased gold, bonds, and the dollar, keeping markets on edge ahead of a European Central Bank meeting.
In early trading, the Nikkei lost 2%. Australian shares also fell 2%, led by losses in banking stocks, with mining companies also taking a significant hit, as the prospect of a global banking crisis prompts investors to dump growth-sensitive assets.
Futures on the Hang Seng were down 2%. Oil prices have fallen to 15-month lows, while gold reached a six-week high.
The S&P 500 lost 0.7% in New York, but the biggest losses were seen by banks and Europe, led Credit Suisse whose shares plummeted 30% to a record low after its largest shareholder, Saudi National Bank, declined to provide further financial support.
British media reported that the Bank of England was engaging in emergency discussions with its overseas colleagues.
The expectation of a 50 basis point hike in Europe has dissipated as markets dramatically reevaluate the global interest rate outlook in light of concerns in the banking sector.
The likelihood of the ECB raising rates by 50 basis points is now less than 20%, based on money market pricing.