Wall Street stocks deepened their losses Monday and Tokyo had its worst day in 13 years as panic spread across trading floors over fears of recession in the United States.
New York's tech-heavy Nasdaq Composite index tumbled more than six percent of the start of trading, but pared its losses to stand down 2.8 percent in late morning trading.
The S&P 500 and the Dow were also down more than two percent.
Major European indices trimmed their losses to finish the day down around 1.5-2.0 percent.
Tokyo's Nikkei tanked more than 12 percent in its worst day since the Fukushima crisis in 2011. It also suffered its biggest ever points loss, shedding 4,451.28.
The market meltdown was triggered by a weak US jobs report on Friday which showed the unemployment rate reached its highest since October 2021.
The report came two days after the US Federal Reserved decided, as expected, to keep interest rates at a 23-year high while signalling that it could cut them in September.
"Investors are gripped by fears that the Federal Reserve has waited too long to pivot on its policy, especially in light of Friday's disappointing US jobs data and a slew of other weak economic indicators pointing toward a looming recession," said market analyst Fawad Razaqzada at City Index and FOREX.com.
Friday's much-anticipated report showed the US economy added just 114,000 jobs last month, well down from June and far fewer than expected, with unemployment at 4.3 percent.
The news came a day after lacklustre factory data.
Investors fear the Fed's high rates, which aimed to slash inflation, could be plunging the economy towards a hard landing and recession instead of the soft landing sought by the central bank.
Some analysts pointed to the "Sahm Rule", which says an economy is in the early stages of recession if the three-month moving average of unemployment is 0.5 percentage points above its low over the previous 12 months. That was triggered by Friday's data.
But Chicago Federal Reserve President Austan Goolsbee said on CNBC that US jobs numbers are "not looking yet like recession" but said if conditions deteriorate "we're going to fix it."
Speculation that the Fed could cut more aggressively than expected from September, or even be forced into an emergency reduction this month, sent the dollar sliding against the yen.
The Japanese currency was boosted also by a Bank of Japan interest-rate hike last week, analysts said.
The dollar went under 142 yen for the first time since January.
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