Treasuries pared a rally, the dollar dipped and commodity-linked currencies like Australia’s dollar revived. Demand risks from China’s Covid lockdowns are also impacting markets, keeping oil near $110 a barrel after a fall this week.

The challenge from inflation for bellwether retailers weakens the argument that corporate earnings can help stem this year’s rout in stocks. Instead, global equities are sliding toward a bear market as recession fears mount.

“We are pricing in a growth scare,” Lori Calvasina at RBC Capital Markets told Bloomberg TV. “The market is trying to find a bottom here. There is a lot of uncertainty in this market right now about whether or not that recession is going to come through or if it’s going to be another near-death experience.”

Signs of stress are building in credit markets. Yield premiums on US investment-grade corporate dollar bonds jumped five basis points Wednesday, in one of their biggest moves this year, a Bloomberg index shows. They are now at their highest since mid-2020.

‘New phase’

“We’ve had investors for the most part who’ve lived through three or four decades of declining interest rates, rising multiples for equities and strong earnings for the most part,” Christopher Smart, chief global strategist at Barings LLC, said on Bloomberg Television. “Now you’re entering a very new phase where we’re not really quite sure where inflation is going to level off.”

In other company news, Tencent Holdings Ltd. dived after warning it will take time for Beijing to act on promises to prop up the Chinese tech sector. Cisco Systems Inc. slid in extended US trading on a disappointing revenue outlook.

Meanwhile, Treasury Secretary Janet Yellen confirmed it’s unlikely the US will allow Russia to continue making bond payments on its foreign-currency debt, as investors have had time to adjust to Moscow’s exclusion from the global financial system for the war in Ukraine.