World shares fell and the dollar slumped on Thursday as a sell-off on global financial markets accelerated on concerns over whether central banks will continue the stimulus they have come to rely on.
Stocks, bonds, commodities and the dollar were all caught in the selling. There were tentative signs markets were levelling off ahead of US trading, although Wall Street was also expected to open in the red.
The slide has been triggered by comments from policymakers at the US Federal Reserve, which meets next Tuesday and Wednesday, about when to start scaling back its huge bond-buying programme.
European shares were down 1% ahead of the US restart, after Japan’s Nikkei fell 6.4% — its second-biggest daily drop in more than two years — rattling markets and leaving Asian shares at their lowest level in 2013.
Heavy selling hit the dollar, which slumped as much as 2% against the yen as investors spooked by Japan’s stock dive unwound bets the yen would weaken. It fell as low as 93.90 yen, its lowest since April 4, giving back almost all the gains made since the Bank of Japan’s aggressive monetary easing announced on that day.
"If you look at it historically, there has never been a period when the Fed has started to take back stimulus that has left the markets untouched," said Hans Peterson, global head of investment strategy at Swedish bank SEB.