Australia

The Australian share market is expected to open sharply lower after a major sell-off on Wall Street, fuelled by a yield curve inversion, which typically precedes a recession.

The SPI200 futures contract was down 131 points, or 2.00 per cent, at 6,404.0 at 7am Sydney time, suggesting an early slump for the benchmark S&P/ASX200 on Thursday.

On Wall Street overnight, the Dow Jones Industrial Average finished down 3.05 per cent - its biggest one-day point drop since October - while the S&P 500 was down 2.93 per cent and the tech-heavy Nasdaq Composite was down 3.02 per cent.

The US Treasury yield curve temporarily inverted for the first time since June 2007 overnight - with two-year Treasury yields surpassing those of 10-year bonds - in a development that has often preceded recessions.

Dire economic data from China and Germany suggested a faltering global economy, stricken by the increasingly belligerent US-China trade war, Brexit woes and geopolitical tensions.

The Aussie dollar is buying 67.47 US cents from 67.82 US cents on Wednesday.

Asia

China stocks closed higher on Wednesday, following the tariffs reprieve from Washington, but gave up much of early gains as bleak data rekindled worries over the country’s economic health.

The blue-chip CSI300 index ended 0.5 per cent higher to 3,682.40, while the Shanghai Composite Index rose 0.4 per cent to 2,808.91.

Hong Kong stocks trimmed early gains to end slightly firmer on Wednesday, as bleak China economic data overshadowed US President Donald Trump’s trade concession, while protests continued to roil the island city.

The Hang Seng index ended up 0.1 per cent at 25,302.28, while the China Enterprises Index gained 0.2 per cent to 9,866.18.

Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.57 per cent, while Japan’s Nikkei index closed up 0.98 per cent.

Europe

European stocks tumbled to a six-month low on Wednesday, as the inversion in the US yield curve following bleak data out of major economies including Germany and China pointed to a looming recession.

Slumping exports sent Germany’s economy into reverse in the second quarter, while Chinese industrial output growth cooled to a more than 17-year low in July, underscoring the impact of a bruising US-China trade war on global growth.

Industrial data from the euro zone in June also had a poor showing.

The benchmark pan-European STOXX 600 index closed down 1.7 per cent, having touched its lowest since 15 February, with indexes in Germany, France, and political crisis riddled Italy falling more than 2 per cent.

Yields on two-year treasury notes rose above the 10-year yield for the first time since 2007, a metric widely viewed as a classic recession signal. That saw government borrowing costs in Germany fell to record lows.

The downbeat mood in markets came after a rare day of relief after Washington delayed tariffs on certain Chinese goods.

All sectors were well in the red, with trade-sensitive technology slumping 3 per cent. The Frankfurt-dominated auto index followed with a 2.8 per cent drop, while falling yields took banks to a more than three-year low.

Stalled growth across Europe has been led by a slowdown in the eurozone’s largest economy, Germany, while the fallout from Washington’s trade war with China, Brexit uncertainty, and Italy’s political woes have also plagued the trading bloc.

The pan-regional index has lost more than 5 per cent so far this month, on course to match a 5.7 per cent tumble in May which was its biggest decline in more than three years.

Limiting the index’s losses were gains in some consumer staples, healthcare and utility stocks, as investors turned to defensive plays.

Balfour Beatty topped the STOXX 600, up 9.3 per cent after the British infrastructure company reported higher first-half underlying pretax profit and increased its annual cash forecast.

North America

Wall Street has sold off sharply as recession fears gripped the market after the US Treasury yield curve temporarily inverted for the first time in 12 years.

All three major US indexes closed down about 3 per cent on Wednesday, with the blue-chip Dow posting its biggest one-day point drop since October.

It came after two-year Treasury yields surpassed those of 10-year bonds, which is considered a classic recession signal.

Germany reported a contraction in second-quarter gross domestic product, and China's industrial growth in July hit a 17-year low.

Wednesday was the first time that yields for two-year and 10-year Treasuries had inverted since June 2007, months before the onset of the great recession, which crippled markets for years.

The US yield curve has inverted before every recession in the past 50 years.

The CBOE volatility index, a gauge of investor anxiety, jumped 4.58 points to 22.10.

The Dow Jones Industrial Average fell 800.49 points, or 3.05 per cent, to 25,479.42, the S&P 500 lost 85.72 points, or 2.93 per cent, to 2840.6, and the Nasdaq Composite dropped 242.42 points, or 3.02 per cent, to 7773.94.

Over 300 of the S&P 500's components are down 10 per cent or more from their 52-week highs, according to Refinitiv data.

More than 180 of those stocks have fallen more than 20 per cent from their 52-week highs, putting them in bear market territory.

All of the 11 major sectors in the S&P 500 closed in negative territory, with energy, financials, materials, consumer discretionary and communications services all falling 3 per cent or more.

Interest rate-sensitive banks tumbled 4.3 per cent.

Macy's shares plunged 13.2 per cent after the department store operator missed quarterly profit estimates and cut its full-year earnings estimates.

Rival department store operators Nordstrom and Kohls slid 10.6 per cent and 11 per cent respectively.

A US House of Representatives oversight panel called on Mylan NV and Teva Pharmaceutical Industries to turn over documents as part of a review into generic drug price increases.

Mylan fell 8.5 per cent while US-listed Teva shares dipped 10.5 per cent.

Facebook slid 4.6 per cent on news that the EU's lead regulator is investigating how the social media company handled data during the manual transcription of users' audio recordings.