SYDNEY (Reuters) – Asian share markets were painted red on Thursday as recession concerns sent bond yields spiraling lower across the globe, overshadowing central bank attempts to calm frayed nerves.

Sterling was also hit by another bout of Brexit blues after a round of votes in the U.K. parliament failed to produce any plan to manage the divorce.

MSCI’s broadest index of Asia-Pacific shares outside Japan slipped 0.2 percent in early trade, with South Korea off 0.7 percent.

Japan’s Nikkei fell 1.6 percent, while E-Mini futures for the S&P 500 lost 0.4 percent

On Wall Street, the Dow had ended Wednesday down 0.13 percent, while the S&P 500 lost 0.46 percent and the Nasdaq 0.63 percent.

Worries that the inversion of the U.S. Treasury curve signaled a future recession only deepened as 10-year yields fell to 15-month lows at 2.35 percent.

The latest lunge lower was led by German bunds where 10-year yields dived deeper into negative territory after European Central Bank President Mario Draghi said a hike in interest rates could be further delayed.

Plans to mitigate the side-effects of negative interest rates could also be considered, suggesting the central bank was preparing for an extended period below zero.

That shift came hot on the heels of a dovish surprise from the Reserve Bank of New Zealand which abandoned its neutral bias to say the next rate move would likely be down.

Yields in both New Zealand and neighbor Australia, quickly sank to record lows in response. [AUD/]

The RBNZ explicitly cited all the easing moves by other central banks as a reason for its turnaround since they had put unwanted upward pressure on the local dollar.

EASING GOES GLOBAL

That is one reason markets are wagering the Reserve Bank of Australia will also be forced to cut rates, simply to stop its currency from appreciating. Policy easing then becomes a self-fulfilling cycle across the world.

“The continued dovish shift by G7 central banks, ongoing support by the Chinese authorities, and the move by the RBNZ will keep pressure on the RBA to also move in the same direction, however reluctantly,” said Su-Lin Ong, head of Australian and New Zealand strategy at RBC Capital Markets.

“It is, essentially, a global policy cycle.”

The RBNZ’s action had the desired effect on its currency, which was pinned at $0.6786 after diving 1.6 percent overnight. The Aussie also slid 0.7 percent to $0.7082.

Draghi’s comments likewise tugged the euro back to $1.1250, and left the U.S. dollar firmer against a basket of its competitors at 96.967.

Only the yen held its own thanks to its safe-haven status and was last steady at 110.31 per dollar.

Sterling had its own troubles as an offer by British Prime Minister Theresa May to quit to get her European Union deal through parliament failed, leaving uncertainty hanging over the Brexit process.

That left the pound down at $1.3165, having been as high as $1.3269 at one point on Wednesday.

In commodity markets, palladium was the focus of attention after sliding 7 percent on Wednesday as its meteoric rally finally ran into profit-taking. Gold was relatively sedate at $1,310.32 per ounce. [GOL/]

Oil prices nursed modest losses after data showed U.S. crude inventories grew more than expected last week as a Texas chemical spill hampered exports. [O/R]

U.S. crude was last down 12 cents at $59.29 a barrel, while Brent crude futures lost 7 cents to $67.16.

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