World stock markets slumped on Thursday, gripped by yet another fierce sell-off after a warning by Federal Reserve boss Janet Yellen over the global economy, while oil fell close to 12-year lows.
New York’s Dow Jones Industrial Average sank overnight as Yellen also appeared to play down the chances of another US interest rate hike any time soon.
The news sparked a renewed sell-off in Asia on Thursday with Hong Kong stocks tumbling as investors also played catch-up after a three-day break for the Chinese New Year.
The intense selling spilled over into Europe, with Athens shedding six per cent and Milan diving five per cent in morning deals, while Paris lost almost four per cent.
Frankfurt and Madrid stocks shed more than three percent, while london dipped 2.7 per cent.
“The Fed chair inspired a wave of panic late in the American session that has fed through Asia and turned up on Europe’s doorstep,” Spreadex analyst Connor Campbell told AFP.
He added that “a lack of sufficient dovishness paired with gloomy comments on the global outlook” had reignited investors’ recession fears.
In commodity markets, New York crude oil collapsed close to a 12-year low underneath $27 per barrel, plagued also by chronic oversupply.
Sentiment soured further as Australian mining giant Rio Tinto posted an annual net loss of $866 million and blamed the “highly challenging environment” as commodity prices plunge and China’s economic slowdown bites.
Dealers continued their flight to safe investments that has played out across trading floors from Asia to the Americas this week as they fret about a possible global recession.