People are reflected in a window as they walk past the Australian Stock Exchange in Sydney, Thursday, Aug. 15, 2019. Asian stock markets followed Wall Street lower on Thursday after the Dow Jones Industrial Average plunged on mounting fears of a possible recession. (AP Photo/Rick Rycroft)

People are reflected in a window as they walk past the Australian Stock Exchange in Sydney, Thursday, Aug. 15, 2019. Asian stock markets followed Wall Street lower on Thursday after the Dow Jones Industrial Average plunged on mounting fears of a possible recession. (AP Photo/Rick Rycroft)

LONDON (AP) — Global stock markets fell sharply again Thursday after Wall Street endured its worst day of the year as recession fears in the U.S. and around the world escalated.

Investors across financial assets have been gripped by developments in the U.S. bond market. On Wednesday they focused on the fact the yield, or interest rate, on the benchmark 10-year Treasury bond briefly dropped below the two-year Treasury’s yield for the first time since 2007.

That’s a sign that traders have sought the sanctuary of U.S. government bonds amid concerns of an economic slowdown. In the past, this so-called inversion of the U.S. yield curve has accurately predicted the past five recessions.

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Traders clearly took fright at that development, with the Dow Jones industrial average dropping 800 points, or 3.1%, on Wednesday — its worst performance of 2019.

“The countdown to a recession has just started,” said Hussein Sayed, Chief Market Strategist at FXTM.

In Europe, Germany’s DAX was down a further 1.2% at 11,359 on Thursday while the FTSE 100 index of leading British shares was 1.4% lower at 7,051. The CAC 40 in France was 0.9% at 5,203. U.S. stocks were poised for modest declines at the bell with both Dow futures and the S&P 500 futures were down 0.2%.

Connected to the recession fears — data out of Europe and China have also been disappointing — are worries over the escalation of the trade conflict between the U.S. and China. Uncertainty about the U.S.-Chinese tariff war has been behind much of this month’s selling in stock markets. So far in August, the Dow has dropped more than 5% and the S&P 500 is down more than 4%.

Add in worries over Brexit, Italian politics and political unrest in Hong Kong and the backdrop for stock markets is about as difficult as at any time since the global financial crisis a decade or so ago.

“The fact is that no one actually knows what is next for the markets,” said Fiona Cincotta, senior market analyst at City Index. “However, the signs flashing from the markets are not great.”

ASIA’S DAY: Earlier in Asia, the Shanghai Composite Index gained 0.2% to 2,815.80 while Tokyo’s Nikkei 225 lost 1.2% to 20,405.65. Hong Kong’s Hang Seng closed up 0.8% at 25,495.46. Australia’s S&P-ASX 200 fell 2.8% to 6,408.10.

ENERGY: Benchmark U.S. crude fell another $1.03 to $54.20 per barrel in electronic trading on the New York Mercantile Exchange while Brent crude, used to price international oils, declined $1.49 to $57.99 per barrel in London.

CURRENCIES: The euro was up 0.1% at $1.1152 while the dollar rose 0.1% to 105.98 yen.