Recession fears spook global markets

European and Asian markets took a beating Thursday, while the dollar tumbled a day after Wall Street suffered one of its worst batterings in two years over recession fears amid decades-high inflation.

Downcast earnings reports from retailers have heightened worries about consumer resilience at a time of rising interest rates, surging energy prices, China lockdowns and the Ukraine war.

Wall Street experienced another losing session after several efforts at jump-starting a rally floundered. The broad-based S&P 500 finished down 0.6 per cent.

"Inflation is catching up and profit margins are taking a hit. Soon enough though, those higher costs will continue to be passed on and consumers will stop dipping into savings and start being more careful with their spending," said Craig Erlam, senior market analyst at OANDA.

"The question is whether we're going to see a slowdown or a recession," he said.

Leading European and Asian stock indices closed in the red.