LONDON - Stock markets were locked in a multi-trillion dollar tailspin on Thursday as a slump in global tech stocks sent investors fleeing to traditional safe havens like bonds, the yen and the Swiss franc.

Europe's main bourses thudded more than 1 percent lower in early moves as both there and in Asia traders reacted to Wednesday's worst day for the Nasdaq since 2022 after underwhelming earnings from the likes of Alphabet and Tesla.

The sell-off in stocks saw investors ramp up bets on rate cuts globally, with futures implying a 100 percent chance of a Federal Reserve easing in September. A spike in market volatility fuelled a vicious squeeze on carry trades which saw the US dollar sink another 0.7 percent to 152.78 yen on Thursday.

MSCI's broadest index of world stocks lost 1 percent, while Japan's Nikkei tumbled 3.3 percent, exacerbated by a 11 percent plunge in Nissan Motor after its quarterly profit slumped 99 percent.

Taiwan's markets were closed for a second day due to a typhoon.

On Wall Street, the Nasdaq had lost almost 4 percent as lackluster 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 jumping to a three-month high. Investors looked for the safety of cash and super-liquid short term debt, with US two-year yields hitting their lowest in almost six months on Wednesday.

"There are a multitude of drivers at the moment especially what is going on with the stock markets" senior FX and Macro strategist at BNY Mellon in London, Geoff Yu, said

He also pointed to weakening car sales in the US, Europe and Japan, and a China's rates moves this week as a clear sign of softening global consumer demand.

"With the policy responses, markets will be saying bad news is bad news," he added.

Yen surge

The other big mover was the safe-haven yen, up over 1 percent to the strongest level in 2-1/2 months. It surged 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 also rose 0.5 percent to 0.88 per dollar, having gained 0.7 percent 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 fell another 3 basis points to 4.3894 percent, having dropped 4 bps on Wednesday. Ten-year yields also eased 2 bps to 4.2622 percent 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.

"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 US gross domestic product data is due later on Thursday and is forecast to show growth picking up to an annualized 2 percent in the second quarter. The closely watched Atlanta Fed GDPNow indicator points to growth of 2.6 percent, indicating some risk to the upside.

In commodity markets, iron ore prices fell almost 1 percent, copper buckled 1.2 percent, while oil prices were pinned near six-week lows.

Brent futures fell 0.5 percent to just over $81 a barrel, while US West Texas Intermediate (WTI) crude also dropped a similar amount to $77.23. Gold fell 1 percent to $2,373.62 an ounce.