Global stock markets mostly sank Wednesday and the dollar soared as investors fretted over recession fears and heightened Ukraine tensions.

‘With the prospect of a sharp economic slowdown, further pain for households and businesses, and investor sentiment on its knees, alas equities markets continue their descent,’ said AJ Bell investment director Russ Mould.

The major Asian markets all closed down, and European stocks were down through afternoon trading.

The US was the exception, with markets edging up slightly at the open.

The British pound slumped 1.7 per cent against the haven dollar — despite the Bank of England snapping up UK government bonds to try to bring calm to markets.

However, the UK government’s 30-year bond yield managed to retreat to 4.44 per cent, having hit a 1998 peak at 5.14 per cent.

The BoE intervention followed rare criticism Tuesday from the International Monetary Fund, which argued that Britain’s recent budget could increase inequality and worsen inflation.

Credit ratings agency Moody’s also waded in overnight with a warning about soaring debt.

New finance minister Kwasi Kwarteng’s tax-cutting plan last week sent shockwaves through markets, pushing the pound to a record low and leading to dire warnings for Britain’s economy.

‘The BoE’s intervention is an attempt to soothe investor nerves after they were spooked by last week’s mini-budget,’ said City Index analyst Fawad Razaqzada.

The dollar remains the go-to unit as the US Federal Reserve leads the way in raising interest rates.

Observers are betting that US borrowing costs will peak at around 4.75 per cent next year, and are expected to remain elevated for some time.

The prospect of such tight monetary policy has battered equities, as US 10-year Treasury yields — a gauge of future rates — hit four per cent for the first time since 2010.

‘Fear of tightening-induced recessions has wiped out the recovery we saw in stock markets over the bulk of the summer as investors were once again burned by an over-eagerness to catch the bottom in the market, despite there being little evidence of it being justified,’ said OANDA’s Craig Erlam.

‘That fear has now gripped the markets and we may see a little more caution going forward,’ he said.

Sentiment was also rattled by worries about developments in Ukraine, after Kremlin-installed authorities in four regions under Russian control claimed victory in annexation votes, with Moscow warning it could use nuclear weapons to defend the territories.

Ukraine and its allies have denounced the so-called referendums as a sham, saying the West would never recognise the results.