After a painful sell-off in New York, markets fell in Asia on Thursday, which was fuelled by bets that the Federal Reserve will embark on an aggressive campaign to fight inflation by hiking interest rates several times.
The December policy meeting of the US central bank showed that while officials were worried about the fast-spreading Omicron coronaviruses variant, they were confident that the world's top economy was in good health and able to absorb high borrowing costs.
The Federal Open Market Committee has started winding back the vast bond-buying stimulus put in place at the beginning of the epidemic as price rises remain stubbornly high, with the programme due to end in March.
Traders had been expecting the bank to start lifting rates.
Policymakers had said they would not remove their support until it was happy that unemployment had tamed and inflation was running hot. Both seem to have been achieved or close to it.
The Fed minutes said that it may become necessary to raise the federal funds rate sooner or at a faster pace than participants had previously anticipated. The move away from massive central bank support has rattled markets in recent months, which has resulted in a series of records or multi-year highs on cheap cash.
With the punch bowl being taken away, traders are in retreat, especially those invested in tech firms, which are more susceptible to higher borrowing costs.
On Wall Street, the Nasdaq plunged more than three percent, while the Dow and S&P 500, both of which started the week with new records, lost more than one percent.
Tokyo's losses fell more than two percent, while Sydney was off more than one percent. Hong Kong, Shanghai, Seoul, Wellington, Taipei, Manila and Jakarta were well down.
Carol Schleif, of the BMO Family Office, told Bloomberg Television that we are prepping people for volatility.
The investors mood is pretty dour and you had another record double-digit year. We think the volatility will increase this year because there is a lot to deal with.
There is going to be a levelling off of some things, improvement in some things and people are watching the Fed and company earnings. Other assets were weighed down by the prospect of higher rates.
Concerns about the virus lockdowns in China weighed on demand optimism, as oil shed more than one percent.
It dropped to $42,506 at one point, its lowest level since a flash crash at the beginning of December and well down from the record near $69,000 seen in November.
Dollar yen: DOWN at 115.89 yen from 116.06 yen late Wednesday.
West Texas Intermediate: DOWN 1.0 percent at $77.07 per barrel.
Brent crude for the North Sea was down 1.2 percent at $79.81 per barrel.
New York -- DOW: DOWN 1.1 percent at 36,407.