Asian markets fell in early trading Thursday, following Wall Street’s worst day of the year amid signals of recession.

The yield on the closely watched 10-year Treasury fell so low Wednesday that, for the first time since 2007, it briefly crossed a threshold that has correctly predicted many past recessions. Weak economic data from Germany and China added to recent signals of a global slowdown.

That spooked investors, who responded by dumping stocks, sending the Dow Jones Industrial Average

DJIA, -3.05%

  into an 800-point skid, its biggest drop of the year. The S&P 500 index

SPX, -2.93%

 dropped nearly 3% as the market erased all of its gains from a rally the day before. Tech stocks and banks led the broad sell-off.

On Thursday, the U.S. 30-year bond yield

TMUBMUSD30Y, -2.58%

  — which hit an all-time low Wednesday — dropped further in Asian trading, falling below the 2% level for the first time. Meanwhile, China’s central bank set the daily midpoint of the yuan at 7.0268 per U.S. dollar, the sixth consecutive session below the 7 level.

Japan’s Nikkei

NIK, -1.55%

  dropped 1.2% while Hong Kong’s Hang Seng Index

HSI, -0.17%

was last in positive territory after sharply recovering from early losses. The Shanghai Composite

SHCOMP, -0.62%

  fell 0.8% while the smaller-cap Shenzhen Composite

399106, -0.75%

  slipped 1%. Benchmark indexes in Taiwan

Y9999, -1.01%

 , Singapore

STI, -1.49%

  and Indonesia

JAKIDX, -1.04%

  all retreated, and Australia’s S&P/ASX 200

XJO, -2.66%

  slumped 2.2%. South Korea’s Kospi was closed for a holiday.

Among individual stocks, SoftBank

9984, -1.75%

  sank in Tokyo trading, along with Toyota

7203, -0.95%

 , Nintendo

7974, -1.07%

  and Inpex

1605, -2.39%

 . In Hong Kong, real-estate stocks such as New World Development

17, +4.95%

  rose, while food processor WH Group

288, -3.93%

  and tech giant Tencent

700, -2.94%

  fell. Largan Precision

3008, -1.56%

 slipped in Taiwan, and Beach Energy

BPT, -4.71%

 , BHP

BHP, -2.83%

  and Westpac

WBC, -2.98%

  dropped in Australia.

Markets are increasingly anxious over the lack of signs of progress toward settling the U.S.-Chinese tariff war over trade and technology.

“U.S. recession risks have increased from U.S. aggressive trade policies on China hurting the rest of the world,” said Eugene Leow and Philip Wee of DBS Group in a report.

On Wednesday night, President Donald Trump linked a trade deal with China responding “humanely” to the Hong Kong crisis, and suggested a meeting with President Xi Jinping to resolve the situation.

Investors have been plowing money into the safety of U.S. government bonds for months amid growing anxiety that weakness in the global economy could sap American growth.

Uncertainty about the U.S.-Chinese tariff war has spurred a return of volatility to the stock market in August. The Dow has dropped more than 5% and the S&P 500 is down more than 4%.

Traders tend to shift money to the safety of U.S. government bonds when they’re fearful of an economic slowdown. That causes the market price to rise and yields — the difference between the current price and the payout when the bond matures — to shrink.

When the yield on longer-term Treasurys falls below that of shorter-term issues, economists call that an “inverted yield curve.” It suggests bond investors expect growth to slow so much that the Federal Reserve feels compelled to cut short-term interest rates to support the economy.

The yield on the 10-year Treasury dropped from 2.02% on July 31 to below 1.60%. On Wednesday, it briefly fell below the two-year Treasury’s yield for the first time since 2007.

Each of the last five times the two-year and 10-year Treasury yields have inverted, a recession has followed.

Elsewhere, Australia added a stronger-than-expected 41,000 jobs in July, rebounding from the previous month’s contraction. Unemployment held steady at 5.2%.

Benchmark U.S. crude

CLU19, -0.56%

  lost 28 cents to $54.95 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.82 on Wednesday to close at $55.23. Brent crude

BRNV19, -0.67%

 , used to price international oils, fell 40 cents to $59.08 per barrel in London. It lost $1.82 the previous session to $59.48.

The dollar

USDJPY, -0.02%

  gained to 105.93 yen from Wednesday’s 105.86 yen.

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