(Updates prices as of 0530 GMT)
Asian shares were hammered on Thursday as a slump in global tech stocks sent investors fleeing into less risky assets, including short-dated bonds, the yen and Swiss franc.
Chinese stocks, iron ore and oil prices dropped further after the country's central bank sprang a surprise cut in longer-term interest rates, only stoking further worries about the world's second-largest economy.
European markets are set for a lower open, with EUROSTOXX 50 futures STXEc1 down 0.6% while FTSE futures FFIc1 slipped 0.2%. Nasdaq futures NQc1 , however, rebounded 0.3% and S&P 500 stock futures ESc1 rose 0.2%.
The sell-off in stocks saw investors ramp up bets on rate cuts globally, with futures implying a 100% chance of a Federal Reserve easing in September. A spike in market volatility fuelled a vicious squeeze on carry trades which saw the U.S. dollar sink another 0.7% to 152.78 yen on Thursday. FEDWATCH
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS lost 1%, while Japan's Nikkei .N225 tumbled 3.3%, exacerbated by a 11% plunge in Nissan Motor 7201.T after its quarterly profit slumped 99%.
Taiwan's markets .TWII were closed for a second day due to a typhoon.
Chinese blue-chips .CSI300 slid 0.9% with the Shanghai Composite index .SSEC falling 0.9% to a five-month low. Hong Kong's Hang Seng .HSI plunged 1.7%, finding little support from Beijing's latest easing step.
On Wall Street, the Nasdaq .IXIC lost almost 4% - the worst one-day fall since 2022 - as lacklustre Alphabet and Tesla earnings undermined investor confidence in the already lofty valuations of the "Magnificent Seven" stocks.
That added to recent market volatility, with Wall Street's fear gauge .VIX jumping to a three-month high. Investors looked for the safety of cash and super-liquid short term debt, with U.S. two-year yields hitting their lowest in almost six months on Wednesday.
"Traders have played outright defence, as the saturated and well-owned tech position continues to be unwound," said Chris Weston, head of research at Pepperstone.
"We can also add an ongoing unease around China's growth trajectory, very poor PMIs in Europe and a bearish opinion piece from ex-New York Fed member Bill Dudley, and investors and traders derisked and de-grossed portfolios."
The other big mover in Asia was the safe-haven yen, up 0.7% to the strongest level in 2-1/2 months. It surged 1.1% overnight, with the upward momentum intact ahead of the Bank of Japan's meeting next week where policymakers will debate whether or not to raise interest rates.
The Swiss franc CHF= also rose 0.2% to 0.8826 per dollar, having gained 0.7% overnight.
Short-dated bonds rallied, supported by comments from former New York Fed president Dudley that the central bank should cut rates, preferably at its policy meeting next week.
The yield on two-year Treasuries US2YT=RR fell another 3 basis points to 4.3894%, having dropped 4 bps overnight. Ten-year yields US10YT=RR also eased 2 bps to 4.2622% on Thursday.
Markets are fully pricing in a quarter-point rate cut from the Fed in September, with even some risk for a 50 bp cut. For all of 2024, a total easing of 65 basis points has been priced in. FEDWATCH
"The rate cut expectations are getting very elevated the same way as they were last year," said Andrew Lilley, chief rates strategist at Barreyjoey in Sydney.
"My worry is that the market is getting ahead of the economic data because we have seen previously that these short-term dips in inflation haven't been sustained."
Indeed, advance U.S. gross domestic product data is due later on Thursday and is forecast to show growth picking up to an annualised 2% in the second quarter. The closely watched Atlanta Fed GDPNow indicator points to growth of 2.6%, indicating some risk to the upside.
In commodity markets, iron ore prices fell almost 1% as China concerns weigh, while oil prices were pinned near six-week lows.
Brent LCOc1 futures fell 0.9% to $80.91 a barrel, while U.S. West Texas Intermediate (WTI) crude CLc1 also dropped 1% to $76.84.
Gold fell 1% to $2,373.62 an ounce XAU= .
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