Global stock markets endured another turbulent sell-off on Monday as equity indices across Asia and Europe fell following data from the U.S .and China that deepened fears of a painful slowdown in global growth.
Japan's Topix index fell into bear market territory, down 20.3 per cent since its last cyclical peak in March. This compared with the FTSE All World index, which is down 14 per cent since its cyclical peak.
Investors continued to seek the safety of triple-A rated assets, and Australian bond yields on maturities of one year and above became the latest to hit record lows.
Yields in the U.S., U.K., and Germany, among others, have been driven to record lows in recent sessions as confidence in risk assets collapsed and investors were driven into quality government bonds. Last week, Germany's two-year yield turned negative for the first time, and remained close to zero on Monday.
Meanwhile, global slowdown fears sparked another sell-off in commodities markets, with oil falling to an eight-month low and copper and other industrial metals joining the slide.
Economic data from the U.S. and China prompted the latest sell off. On Friday, U.S. payrolls data showed just 69,000 jobs were created in May, much lower than even the most modest predictions and appearing to confirm the recent soft patch in the country's labour market recovery.
Over the weekend, meanwhile, Chinese purchasing managers' data showed that growth in the country's services sectors slowed in May, with the PMI non-manufacturing index falling to 55.2 from 56.1 in April. Any number above 50 indicates expansion.
Stocks fell, with the FTSE Asia Pacific index down 2 per cent. Hong Kong's Hang Seng index lost 2 per cent, while Tokyo's benchmark Nikkei 225 index fell 1.7 per cent. European markets were lower, with the FTSE Eurofirst 300 shedding 0.5 per cent by mid morning. Markets in the U.K. are closed for two days for the Queen's diamond jubilee celebrations.
In currency markets, the dollar gained ground as investors clambered for the exits in risk assets. The U.S. currency added 0.2 per cent to $1.2405 against the euro and was up 0.2 per cent to Y78.19 against the yen.
Mitul Kotecha at Crédit Agricole said speculative positions in currency markets were beginning to look extreme as dollar longs - those positioning for further gains in the U.S. currency - hit an all-time high. Conversely, short positions in the euro - those positioned for further euro losses - also hit a record.
"This may herald a strong short-covering rally, but for this to happen there needs to be good news and clearly this is in short supply," Mr .Kotecha said. "Little change in appetite for the euro is expected unless officials in the euro zone get their act together."
In commodity markets, Brent crude futures fell further, down 1.7 per cent to an eight-month low of $96.75 a barrel. Copper fell 1.7 per cent to $3.25 a pound.